408 small block street build

If the heads flow decent I don't see any reason at all that it won't make 525+ hp with the combo you have now, properly tuned of course. I'd start by yanking the heads and have them flowed to see what their actually doing. Sounds to me like something isn't doing what it should because if the dyno operator figured the correction correctly it should have made way more than 350 rwhp. This is where a time slip would really come in handy