What is the correct way to torque ARP rod bolts?

With a stretch gauge, not a torque wrench, if you can.

• ARP's method: zero a rod bolt stretch gauge on the untightened bolt, then tighten until the gauge shows ARP's stretch spec for that bolt. The stretch value replaces the torque spec.
• Why stretch beats torque: a bolt works like a spring, and clamp load comes from how far it stretches. Torque only estimates that, and torque-wrench accuracy and the lubricant used both change the result. ARP does publish a torque spec for people without a gauge, but Jeff Smith has often found that it doesn't reach the correct stretch.
• Stock rod bolts are different: GM uses torque-angle, not a torque spec — 15 ft-lb, then an additional angle measured with a torque-angle gauge (85° on Gen IV engines such as a 2007 5.3).

Reusing stock bolts: LS rod bolts are not torque-to-yield (the LS head bolts are), so they can be reused as long as they were never over-tightened. New bolts each teardown are optional, not required.

Use ARP's instructions and lubricant for the exact bolt part number you bought.