The lack of power is your timing. There is no way that thing would run right with it retarded. Personally I would just get rid of the adjustable timing gear. They are really for dirt track high rpm type engines.
I run my 22R at 5* timing and when I head into the mountains I retard it to 3*'s. Also since its idling smooth, it leads me to believe the carb has been adjusted to get it to idle right. I would back off the idle speed and advanced the timing to 5* then adjust idle to 800-850 rpm.
