A stock 340 with 16 initial should be pulling 15" of vacuum or really close. Something is leaking somewhere. A stock 340 shouldn't be hunting at idle rpm. Clean idle at 750 should be good with minimal drop in gear.
If it idles at 800 and drops to 350, it's likely dropping timing when that happens or has a bad vacuum leak. Just my guess. Do all this stuff with the vacuum advance line plugged.
