James,
You definitely need to block any open vacuum sources. How does it idle? When you say you set the timing to 2 degrees over, do you mean it's only 2 degrees advanced? Do you have the vacuum advance for the distributor hooked up, can you verify it is working by looking at the breaker plate while applying vacuum from another source?
If it runs ok at idle, and just won't gain speed, sounds like timing, or more lack of advance at higher RPM.
Good luck,
Shawn