So,
Electrical; I JUST put on a new OEM cap and rotor, new wires, new plugs AC Delco as suggested by Mercruiser, set BASE timing to 10 degrees before.
Fuel; since issue started I bought another carburetor, and adjusted mixture at 650 rpm, measured fuel pressure at 6 psi after NEW anti-siphon valve was installed and new water separator and pulled tube out of the tank and cleaned mesh strainer and replaced back into the tank not to mention cleared clog in gas tank vent.
Mechanical; I measured compression of each cylinder at 164 to 177. I pulled all plugs out and with a wrench spun the CRANK back and forth while staring at the rotor, I couldn't see any SLOP, by that I mean I spin crank CW then back and the rotor did not hesitate to follow. The timing chain looks good then.
I filled tank with new gas, I dumped in 2 cans of sea foam and sprayed 1/4 can down the carb while running.
All that, and the problem still exists. Backfires up intake. Only difference, the range is 3200-3800
And only after warm up. It flys like bat out of hell, idles like a dream.