Sounds like you are taking the idea to the next level. You'll have to report back on your findings. Sounds interesting. I always thought those vacuum switches I used would have worked fine had they been adjustable like a Crane distributer advance unit. Maybe they exist now but not when I was playing with them 20 years ago.
Funny you had a problem with that unit. A good friend of mine had the same problem with his after we put a 200-4R in his 81 Bird. His lasted a little while though before he had a problem. He also had a problem with the speedo cable hookup coming apart. But then he put over 350k miles on his Bird too.
I have observed that scenerio of lockup/downshifting but deal with it by not using the lockup feature unless I am on a long steady highway. If I find myself needing to change speeds a bit, I just leave it set to the max setting so it doesn't cycle on/off or otherwise become a pita with the downshifting. Frankly, I don't like to force a downshift with it locked as it tends to be too violent and scares me. The few times it happened I found myself looking in the rear view mirror for tranny parts bouncing down the road!
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"Objects in mirror are closer than they appear"