might not be a bad idea to also check the timing advance. If the weights and springs under the mounting plate for the points get corroded, your advance might be out of spec. Do you have the chart that shows what the advance is suppose to be?
Sorry to revive an old thread. Curious what was your solution? It seems I am having the exact same symptoms as you are...Re: Where is timing tab SUPPOSED to be - 1987 Mercruiser 3.7 ????
Somewhere, I think. Mounting plate? I changed points plugs wires. She runs pretty well on muffs, but under load is a whole other thing. I'm gonna shoot a video today if it's not timing.
Gave her a real good tune up, since she sat out for a season. I'm a 5.7 guy, but I'm starting to become fond of this little power house.