I've never used the M/MV, but the same principles apply to whatever carbs you are using.
Backfires on deceleration are usually caused by a vaccuum leak or a lean out condition...
I can't see whats leaking, so all I can say is that the pressure only needs to be between 3-5 psi for it to work. A shop manual would have the specs for that...
Your base timing shouldn't need to change, but if you change the camshaft, you may want to experiment some. Recurving the dizzy may be needed to maximize performance...
Any time you open the throttle, you will loose vac signal, which in turn cuts back the total timing (when using a vac advance) which is how the engine adapts to a "load" condition (reduces detonation). Whether or not the vac advance sees vac at idle depends on if you have it hooked up to a ported or manifold vac source. You could try both and see which works better for your situaton, assuming the carb has both options on it...
