How tight should the block heater be?
I noticed a little leak under there and put a small crescent wrench on there to see if it was loose. I put a full turn on it pretty easily and it feels like I could put another turn on it before it started to tighten up any more...

Kinda a pain to reach. Should I maybe back it almost out, wrap it up with a bunch of teflon an try again?

 

I suggest you just snug it up and then watch it for any more leaking. There have been a few reports of loose block heaters and all the guys did to fix them was tighten them up a little.