According to Herbert P. Kean's book Restoring Antique Tools, mounting the vial in place can be achieved by filling a bathtub with a few inches of water, floating a board, laying the level on top of the board, and adjusting the vial until it's level.
I tried this with a large tub of water, but the board did not support a block of wood very well. It tended to tip, become soaked with water, and sink.
Fortunately I tried this with a sacrificial block of wood rather than my homemade level.
Instead, I sat one of the nice antique levels I own on top of my table saw and shimmed it with two thin metal rulers until the vial showed that it was level. I used this surface on which to sit my level.
I considered using spackling to secure the vial in place, but decided to use Plaster of Paris instead. It sets up quickly and it's the same substance that was used in antique levels.
Mix the plaster two parts to one part water, dab water in the wood cavity of the level, and spread the mixture with thin strips of wood. Through trial and error and a few moments of panic, I found that it's best to let the plaster set up a little bit, then push the vial in place.
You need to consider the "windows" through which the vial will be viewed—there should not be any plaster on these areas of the vial or it will be noticeable and unattractive.
Make sure the vial is sitting a little beneath the top surface of the level. That way, when the brass plate is screwed in place it won't touch the vial. You also need to be sure that the convex curve in the glass is arcing upward and that the vial is positioned in the center of the cavity.
I used thin strips of wood to scrape away excess plaster, then used a moistened Q-tip to clean up smudges.
I pre-finished the wood before I seated the vial. In a few days I'll rub on some paste wax and take some glamour shots of the completed project.
The previous three blog posts about making this level are 1, 2, and 3.