1977 904 horsepower limits?

Go to www.tcsproducts.com and look through their web page and see what is available for the 904. They and other performance automatic transmission companies will have what you need to build any 904 you want.
If it was mine: and I wasn't racing --> Raybestos waffle lined friction plates, along with new steel plates, Overhaul gasket and seal kit of course, new bands (Kevlar if you so desire), bushing kit, washer kit, roller sprag kit, TF-2 transgo shift kit, filter, output shaft bearing (it's old and got a lot of miles on it). In other words, a complete, no short cuts taken rebuild. Check and then recheck the planataries for excessive wear or sloppiness, look closely at the pump gears and replace if questionable, look at the input shaft for spline wear, replace the forward clutch diaphragm spring (prone to cracking) and look closely at the two drums for wear. Update the reverse servo piston, get the intermediate accumulator repair kit. I would think that this would/could hold up to 350/400 HP.
Now if you're racing, that opens up a whole other thing. Getting ANY transmission to live up to the racing life depends on the thickness of your wallet.
Others may disagree.