Shift speeds

yur in trouble.
The Speed-O gear has NOTHING to do with the upshift speeds; it's one and only job is translate driveshaft rpm to mph for your Speed-O.
The governor only works in auto shift mode.
Since yours is still working; It commands all shifts when "Drive " is selected.
When you manually select Second or First, the governor is told to buzz off.... more or less.

While the governor is on line
, ( in auto-shift mode)
The Line-pressure plus the Throttle pressure, together, oppose the governor, to delay the upshifts, by increasing their combined pressure. They combine to become ONE. Your throttle position controls the throttle pressure, but line pressure is set before the pan goes on.
NONE of these have anything to do with flare ups, unless grossly maladjusted.
Flares are caused by the inability of the clutches or bands to progressively lock up; or by the shift control valves waffling around the shift pressure, or sticking valves, or a screaming internal pressure leak.
Sometimes the Second gear band needs adjustment, because it is outside of the working range of the servo. Sometimes the 2-3 flares because the Hi-drum is too slow to engage or the clutches are worn out, or the oil is too slippery.
With your foot-feeder fixed, both shifts should occur at about the same engine rpm. These shifts are controlled by the spring calibration of the shift valves, as they oppose the governor. If one shift occurs considerably later (especially if it is the 1-2,lol) , this is very annoying.
The BAD NEWS is this, shift flares are almost always gonna need a tear-down.
You may be able to crank up the LINE- Pressure to overcome some of the flare, but the trans will shift harder in the process. You may be able to adjust the throttle-pressure to overcome some of the flare, but the other shift will become harsher.
IMO, a pressure test per the service manual may point you in the right direction, but the results will be directly meaningful only with the experience of the guy doing the test.

Do my shift speeds need to be brought down?
That's a personal preference;
as for me;
I like to be in top gear by 30 mph, under "normal" acceleration, but at more throttle, a 4000rpm shift is ok. But it has to downshift by itself at Part Throttle to pass at 55/60 mph.
I do NOT like the trans to be hunting for a shift, while in traffic. And I especially don't like a screaming engine below 32 mph or thereabouts. And I like each shift to occur at or near the same rpm, at a particular throttle-setting. In your case with the Hi-stall TC, IDK if you can make it work the way I like it to, with 3.23s.
I believe there is a governor in the tailshaft of the transmission? Is this what can be changed to bring the 2nd-3rd shift speeds down?
yes, you use that governor by altering it's weight and timing. But that governor is synchronized to your driveshaft rpm. It should NOT need to be changed unless you change the rear gear, or it is synchronized to a previous rear gear ratio.