When is a 904 too small?

At what power level is a 904 no longer big enough?
Here's the story.
a couple of years Back My dad bought a drag free 904 w/full manual valve body from a reputable shop. The car is an Aussie Valiant hardtop. (Very similar to a 68 Dart) Runs a 340/418 stroker.
In the time it's been in there, the car has done around 1200 miles. and about 20 quarter mile passes. (best to date of 12.5@107 running a 2.92 rear end, and no rev counter yet)

thing it's doing is, under full power acceleration there's a flare on the 2-3 shift. So I messaged the shop who built/supplied it.
their reply was yeah, I'd say the High gear clutch is worn.
But after so little use??!! Then they said how much power you making? I dont know the actual numbers. but I told him what Times I've run.
Then they say yeah the 904 is limited in what high gear clutches it can take. And theyre considered a lighter duty transmission.

So are we dreaming to run a 904 in this car, or do you think he's downplaying that the trans they built isn't up to it?
20 passes, and 1200 miles.

What do you guys reckon?
12.5 is really good considering a 2.92 rear end. What stall do you run? Is the rear a 7 1/4?
I ask because I have the 2.92 rear, and a 450 hp 340 sitting in the corner of the garage. The car has a 273 in it, which is stock, but pairs with the 2.92 fine. I am hesitant to put the 340 in it because it seems like such a mismatch.
But, sounds like you did it, and it works well..
I have a built 904 like yours too, sitting on the garage floor. It has a 4k stall and manual valve body. All that just seems like to much for a 2.92 to me, but maybe not? Yes, a 8 3/4 is on my list..