If it runs good and strong up to 3800 rpm then starts to feel choked above that, my first inclination would be to say that the floats aren't adjusted correctly in the carb. Sounds like it's starting to starve itself of fuel. Or maybe the fuel pump isn't supporting the required fuel flow.
But this is only a guess, since I don't have an I/O and have limited experience with carbed V8's. Sorry I can't help more.
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1999 180 Horizon OB Fisherman Pkg
San Antonio, TX
Choice of tow vehicle:
'93 Explorer 4x4 (sold)
'05 Grand Cherokee 4x4 w/ 5.7 Hemi (member of the 240k+ mile club!)