340 breaking up @ 3500 rpm

And following up on the comment from hangn0ut above, does the break up occur only under heavy throttle above 3500? I.e., can you rev it slowly past 3500 with light throttle while cruising or while sitting still and not have the breaking up problem? This difference breaking up or not with light versus heavy throttle) can help sort out if it is ignition or not. As hangn0ut notes, if this happens under all throttle conditions, it is less likely to be ignition.

Does the ignition have the ballast resistor that came with the coil?

How is the grounding of the ignition box (ECU)?

Have you checked the polarity of the pickup to be sure it is right?