It is best for the indexer to work off the final proof although second proofs can be used as long as you allow time for the indexer to check for the effect any subsequent changes may have on the index.
Please provide a single-sided A4 PDF of the text as I mark up a paper copy of the text and then input the index headings into my indexing software. I use SkyIndex software which automatically sorts the index to set requirements, most of which can be quickly adjusted.
Marking up a paper copy can have benefits if there is a last minute change of the layout of the book (this has happened to me) and also for checking any changes between the second and final proofs. The two copies can be visually checked side by side with any changes to the index quickly made in SkyIndex.
Density of Indexing
An average index has 3-5 entries per printed page while a detailed index typically has 6-9 entries. Exhaustive indexing of biographies, for example, can have 10 or more entries.
Do you want just a general index, ie, of the people and organisations named and the general concepts mentioned or is there specific information that needs to be included? For example, a list of all the rugby games mentioned in chronological order or a list of all the written work of an author in the index.
If there are constraints on the number of pages available for the index, this may govern what is included.
It pays to have a think about this before indexing starts as taking a second sweep through the text to find specific information after the index is finished will take additional time which may not be included in the time quoted.
If there are some space issues once the index has been typeset, the indexer is the best person to make some deletions as there are usually a few entries which were borderline in terms of inclusion and/or the indexer knows how to condense some things to save a few lines.