The amount of clearance you are saying is a lot. 012" is enough to cause a significant vacuum leak. That would definitely cause it to run poorly, but perhaps not enough to cause the condition you describe. I suggest that you correct the obvious problems you have found and then re-start with basic engine diagnosis. Overtightening the manifold will only cause more problems than it solves. Take it to a machine shop and have it trued up.
An engine needs 3 things to run: 1) Compression 2) Spark - and at the right time. 3) Fuel/air mixture. Ideal is at 14:1
The condition you describe can be caused by many things: Ignition timing - could be far enough off to cause your problem. Valve timing - are you sure that the timing chain and sprockets are lined up correctly? This is another thing that can cause your problem. You can verify with a compression test. If valve timing is off, compression will be low.
I suggest that after correcting any OBVIOUS problems, you return to basic diagnostics. I would start with a compression test. Following that, I would check engine vacuum. Also check ignition timing. Engine vacuum should be at least 22-25" at idle. Ignition timing should be within a few degrees of spec. Most engines will run decent at 5 degrees BTDC.
Make a few basic tests like this and report back. There is still the possibility that your problem could be in the carb, but in order to prove it, all other aspects should be verified.
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Today's Featured Article - Recollections of a John Deere GP - by Charlie Cook. I grew up on my dad's 280 acre general farm in Western Michigan. Dad's only tractor when I was very young was the old GP. My first recollection of this tractor was when dad allowed my brother and myself to ride on the tractor with him driving. One of us would sit on the left fender (away from the clutch) and other would sit on the gas tank and hold onto the crankcase breather pipe.
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