I wanted to report back with results.
I installed an adjustable vacuum advance can, but couldn't get any more than the 7° of vacuum it had with the existing can. It turned out the issue was the prior owner had installed some kind of vacuum advance limit plate. It's visible in the picture on top of the vacuum advance. I installed the limit plate back on with the adjustable vacuum can without realizing what it was. Worse, when I couldn't get more advance, I adjusted the vacuum can too far and ruined it (too many turns and the screw comes out inside the diaphragm.)
The prior owner had two advance limit plates and a few different bushings that go on that stud that limit vacuum advance. I put the old vacuum can back on and a different plate with no bushing. Immediately had 30° of vacuum advance. None of the existing bushings got the right amount vacuum advance, so I made a couple out of 1/8" plate, trial and error until it was where I wanted.
So far, it runs best at 16 initial, 12 vacuum, 18 mechanical, very close to what JLMounce recommended. It might run a little better up top with just a bit more mechanical advance (36° vs 34°) but I don't have the right bushing for that. AFR targets are 13.5 idle, 14.0 cruise.
At these settings, it can run down to about 1500 RPM in first gear before it bucks. It can do 1800 RPM in 6th on the highway as well. It still smells a little at idle, but better than before. Probably can't do much better without less intake/exhaust overlap or sequential injection.
After making these changes, it did develop a little flat spot when transitioning from the idle circuit to cruise at gradual acceleration. I could see the AFR go all the way to 15.9 in those instances. On this setup, the IAC needs to be set to almost closed at idle, as close to 5 as possible. With the timing and AFR changes, the IAC was closer to 35-45 at idle. After readjusting the throttle blades to get the IAC closed a bit more, the flat spot is mostly gone. It still goes lean in transition, but I can't feel it.
I can see the advantage of digital timing. I must have had the distributor cap off a dozen times messing with it.
All this really makes me want to upgrade the EFI. Terminator is looking really tempting!
Thanks to everyone for all their help.
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