Is my 340 Overcarbed? Avg 5-6 MPG

13.2 is still pretty rich for cruise even if it runs good. The fact that it ran worse with more timing just means you have good total advance you still need way more than 14* initial. Hate to say it but you still have a ways to go if you want the best mileage and performance.

Others have mentioned you need cruise to be LEANER than wide-open. Cruise should be at least 14.7 and WOT should be in the mid-high 12's that might have something to do with the hesitation.