As I see it you are under 300 cubic inches and hovering around 10 to 1 compression so even with a stock spec head you should be able to run up to 4500 or more. Sounds like the engine is just plain running out of fuel after 3500 rpm if the timing and everything else is correct as you say it is. A Holley around 450 - 485 cfm should let that engine run up higher than 3500. I'd rejet it richer starting with only the primaries until it ran well with no smoke and then do the secondaries. A 600 cfm might be a better choice in the long run but there are plenty of 292s running around with 500 Holleys and Edelbrocks that turn well over 3500 so I'd work with it for a while before I swapped it out.
Mike
