Edge to edge minus the bullet diameter works fine IF a single bullet hole through the target paper is of bullet diameter. It usually is not. So, ideally, you have to be able to measure a single hole and subtract this measurement from the "edge to edge" measurement.
At most benchrest matches, an instrument which features a recticle, to establish bullet hole center, is used. It works well for the purposes of the competition since all targets are measured with the same instrument. It does not always yield true group size due to variations in hole size. These variations may come from variations in the paper from lot to lot or from variations in the paper resulting from humidity differences. Also, it is important that the recticle is appropriate to the caliber used by the competitor. A 308 or 224 diameter bullet requires the use of a different recticle than does a 6mm. I recall having a group fired with a 308 measured at .128" initially when the actual measurement was more like .075". This because the scorer inadvertently used a recticle sized for 6mm bullet holes.
Since so many of my groups are more appropriately measured with a common ruler, it really becomes a moot point! Regards, Bill.