Summary
This thread has run on much longer than I ever expected. Thank you to all that contributed, especially dvogtvpe. Here is what we have so far. Correct me if I am wrong and I will edit.
1. For safety reasons, govern the engine to 3,800 rpm. Maximum torque will be made between 3,000 and 3,400, so additional rpm are an unnecessary risk with a stock flywheel.
2. For a stock 12 hp. engine, it is best to run with a 16 to 17 tooth second gear. This can be accomplished with a 20% under drive. This is the biggest thing to make you competitive starting out. Running in a stock first gear is too low and second gear is too high if you have the standard 13/19 tooth gears.
3. For a 12 hp. engine, run a #26 carb. You get more torque.
4. For more hp. for a 12 hp. engine, bolt on an LP head. It is the easiest way to get an extra 2 hp. without rebuilding the engine. If you can't find an LP head, use a second generation head and have it milled 0.05.
Next year the engine will be rebuilt with a Kerber #3 cam, undercut valves, and a balanced steel crank.
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