Well, the RPM's sound right to me because that's what mine turns, but 12mpg certainly isn't right. I went a good 340 miles on a full tank from the george and back doing atleast 80-85 with spirts over 90. I haven't taken my milage in a while but a few months ago it did 19-20 city and something like 27-28 highway. I'd suspect milage will drop significantly when you get above 65 or so due to gearing.
Anyways before I get away too far we will wait for some more guys to reply to this thread, however I am fairly certain that the TE's had the steep gearing and in turn would explain the situation.
One way you can test all 4 gears is so simply do what I mentioned before and stop her and drop her into '2'. Then put it back into 'D' before you take off. Push the throttle about half way so the car can ride out each gear far enough to tell that each gear is there. Simply count the gears... should be 4 in total