total timing reading accurate with no load?

I have a completely stock 1986 318/727 from a ram. I converted the ignition over to electronic with a Standard LX101 ignition control module and stock replacement vacuum advance distributor WPS brand, all for a 1975 318 from parts catalog.

Got everything hooked up and engine runs beautifully and starts up easy. Right now the initial timing is set at 7 degrees at 730rpm, set with vacuum advance plugged and the car in gear and my son's foot on the brake. Tried to check total in gear as well but couldn't get the car past 2200rpm in gear. Maybe due to the lock up converter, so I couldn't check total timing.
This is normal. Nothing to do with the lockup. That's the torque converter's brake stall speed. You couldn't have even put it gear with a standard transmission without doing a burnout or stalling.
Now, with my dial timing light, and the car in park, I still got about 7 degrees initial, but I'm not seeing 34 degrees until around 3000rpm. And the weird thing is, it keeps advancing the more rpm I gave it. I think it was around 46 at 4000rpm.
That's could be correct. All Chrsyler distributors continue to advance well above 3000 rpm. A stock 318 will have a quick increase off idle and then a long steady secondary advance. How many degrees the advance increases depends on the initial specified for that engine.
I'm a little rusty on timing, but I thought once the distributor reached it's total mechanical advance the timing would stay at there for the rest of the engine rpm range. Why does mine keep rising?
Because Chrysler engineers and techs wanted to provide the best cylinder efficiency and power through those higher rpms. But 46* is quite a bit high. Did you have a the vac advance plugged? If not, that's the answer.
Is it normal because the engine is in neutral with no load?
The mechanical advance relates only to rpm.
The vacuum advance relates to load.