Why the 318 is a phenomenal engine...

The manual trans was a factor here. You didn’t say what you had for a carb or exhaust, camshaft change from 318-2bbl? I doubt is was a stock 2bbl carb doing that. Plus just because he had a 340 doesn’t mean it was in good shape or tuned properly. And did one have 410’s and the other 2.76? Too many unknowns to make any conclusions other than it happened, but why?
The manual probably was a factor. I had 3.23 gears and I assume he had 3.55s which was standard for the Demon 340s I think but I had the stock 2bbl on the 318. His car my not have been in the best of tune but he seemed confident before the race. It's a known fact that some engines just run better from the factory when they should be equal based on the same parts being used and that may have been an unusually good running 318. His might have been an unusually bad running 340 car.