No answers, just a few questions:

-When you rebuilt the engine, did you put in new cams? New chain? Ensure the valve timing is correct? Asking because perhaps when your timing gets to 30+BTDC, perhaps it is too far advanced? And this would only happen at high rpm which is when you see the drop off in power.
-With same engine, I have never been able to get much beyond 28-29 BTDC with distributor at end of adjustment. My car runs best backed off slightly - about 27BTDC at 3000rpm. Are you at end of adjustment slot?
- Trigger points - are they original?
- Coil - did you install new coil with the Pertronix or is it just replacing points? Perhaps coil is breaking down?
- Plug wires - are they proper MB type wires with copper core? (The set of Bosch wires I have only cost about $70. (not exactly OE spec because they don't have resistor at plug end, but they work fine on my D-Jet. If your wires are shorting out, you should be able to see that in dark (dangerous with all those fuel hose connections!))

RE MPS - That is an awful lot to adjust the MPS. Should not need that.

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Graham
85 300D,72 350SL, 98 E320, Outback 2.5