Resolution- Broken Governor Gear, due to a check valve spring (it was in the pump)
I did end up pulling the transmission due to space issues trying to re-install the governor. Which worked out OK, gave me a chance to inspect everything on the bench and do an entire seal refresh. All "hard parts" were in great shape...
Details & Photos
Here - >
http://www.peachparts.com/shopforum/showthread.php?t=111329
I forgot was to lookup the "first gear start" mod...
So is still a 2nd gear start...