Thanks. I will definately look into your idea again just in case. With the choke position that seems to make sense.
I did tear the carb apart again earlier this morning (before getting your advice) and nothing caught my eye. Maybe it was re-jetted incorrectly by previous owner as there is no tag or ID on the carb, other than Zenith name. I swagged all the ports and blew them out with cleaner/air....again, nothing caught my eye.
After swapping out the plugs just about an hour ago (which were in questionable shape) the tractor immedietly seems more responsive, even regarding the choke position. However, after a few minutes of mowing, the engine now surges wide but regularly on 2 second intervals. The other ignition parts are so new they aren't even dirty yet, including the points.
The coil isn't getting hot, per other forum posts.