The seal is a piece of rope that goes around the last main journal, where the flywheel bolts on to. There really is no way to inspect it, other than seeing an oil leak on the ground after you are sure that your pan isn't leaking. If you've got the engine out, it doesn't hurt to change the rear seal.
Replacements come in two pieces, one half goes into the main cap, and the other half into the "saddle". To remove it, you remove the 2 bolts holding the cap down and remove the cap. The half that's in the cap is easy to remove. The problem is removing the one that's above the crank (with the engine correct side up). From what I've seen, the factory does not stagger the rope installation, which makes it hard to remove the upper half. Theoretically you can punch the rope and it should come out the other side, or pick it out and pull it the rest of the way. Problem is, with a high mileage engine, that rope won't stay in one piece or it will be frozen in place with the years of gunk that's accumulated around it. On my engine I had to remove every single main cap and lift the crank off the main bearings as far as it would go, with all the rods still connected. Picking, hammering, or prying in that area is also a bad idea since you may nick the surface and cause a bigger leak later on.
edit- I remember reading about punching and/or pulling the rope out, but after I got mine out I don't see how that would've worked. The saddle and cap have small hooks in them to keep the rope in place, which would've made it impossible for the rope to slide out. I can't imagine even trying to slide the new one in.
Replacing it is in reverse, except you should stagger the halves so that they are not in line with the main caps to prevent leakage later on.
The late model one piece seal is a piece of cake. I did it on my '86 5.0 when I changed the clutch and only took a few minutes. There is a seal puller made for that specific task, basically a small hook similar to a carpenter's hammer.
I think that's the wire that has a hook/corkscrew in it. You jab/screw it into the rope far enough for it to embed itself, pull, and supposedly the seal will come out with it. It's worth a try if you don't feel like removing all the crank bolts.