mercruiser 3.0 WOT issue

Hello, i know there is a list of things to try in this case but im becoming quickly discouraged going through it. I have a 1989 wellcraft 190 classic with a mercruiser 3.0. the boat sat for years and i have it running very well currently. The issue that I am having is the boat will never go above 1800, well currently 2000 rpm under load. It revs fine out of gear. So far to address the issue i have done the following in no particular order. Spark plugs (gapped correctly), coil, fuel pump filter, carb filter, carb rebuild, cleaned the fuel pump. All of this had me traveling at a blistering 8mph, the propeller is an equivalent prop however it is a 17 inch prop instead of a 19 (well known boat repair location i have been working with told me it is fine even though it is smaller). This was occuring at 1800 rpm. The motor also was backfiring so much on start up that it shattered the starter housing, that problem was fixed when I did the timing. It was 6 degrees off (also the advance works perfectly fine as you rev in neutral). The motor has compression that is correct. Basically im running out of things that are in my knowledge or experience to do off of the list. The lower unit is original and the owner i bought it from did nothing to it ( i have the service records). I changed the fluid, it sounds perfectly smooth and i can hear or sense nothing wrong with it. O and last thing the cap and points are relatively new, a year old.
The motor runs completely clear, a little hard starting when cold sometimes but play with the throttle and it starts right up and is fine. Another issue i am bringing up that may help is if its running for hours or so at constant rpm when you take it out of gear it will die if your not on the throttle only button and rev it and slowly bring it down.
Any help please... I want to bring people out on the boat and not have the barges pass me haha

Re: mercruiser 3.0 WOT issue

by the way... the boat exhaust smells of gas, so much if you go back through the wake. The other thing is the throttle can be set to the position for 1800-2000 rpm it is fine. If you push it past that point the boat gets louder and doesnt do anything else (no sound of struggling, no bogging, no change at all)