maybe adjusting the cam a tad beyond “mark line-up ” with the roller would open up things a bit instead of going all the up to 3/4 throttle ???

I don’t know, Tom….I’d let you give up on it….I most always start those engines cold at 3/4 throttle. That way, there is no baloney. They START. Like you said, you just throttle it down as soon as it fires off. Now, at idle speed and warmed up, they should start at slow position with ease….

What was the compression again???

OK, your first picture shows the point timing advanced….
But, there are two timing issues to be considered. The point timing for sure is one, but the positioning of the mag plate at the time of spark is another. And unfortunately, on these small engines, there is no timing “grid” on the flywheel or corresponding mark on the block to compare it to. So, the point timing could be perfect, right in the middle of the hash marks, but the actual ignition timing could be retarded/advanced. Think about adjustments on an older car with points. There are two adjustments to check, the “point dwell”, and the ignition timing/advance. Forgive me for using the word “dwell”, this term has stirred up controversy in the past. Nonetheless, the point dwell could be set perfectly, but the ignition timing might still be way out of whack.
I want to be sure I understand what you are saying….Are you saying that the engine has been running with a properly positioned/unsheared flywheel key during your tests, and these altered keys are something you just tried now? What looks to be a very small change in that purposely altered key is amplified by the diameter of the flywheel, probably about a ten degree difference in timing out at the outer diameter of the flywheel.
Have you tried running the engine with the key altered in both directions/ advanced and retarded? If so, was there any noticeable difference in running qualities. I realize you can not run it at WOT in a barrel so full throttle performance can not be evaluated very well. My theory about timing was triggered by your running symptoms description. Retarded ignition timing will surely cause hard starting and explain why you must advance the throttle so far when starting. Retarded timing will also cause a poor idle and having to open that needle valve out to 2.5 turns. The final symptom that got me on this track was that you felt that the engine was not developing full power, and stumbled/popped during acceleration.
OK, forgive my covid brain, lately I seem to be stumbling over the simplest of calculations etc. So, let’s just say you are looking at the crankshaft/key with the flywheel off from the front of the engine….The key offset should face to your right/port side of the engine to advance the timing. Please feel free to correct me if I’m getting this wrong, wish I had some way of posting pictures/diagrams..
Like I say, I am having similar running symptoms with a 6hp using the conventional/unaltered universal mag. Doesn’t start real well, not a great idle, stumbles on acceleration, and lacks WOT power. Maybe we will both figure out something here….
OK, just reread your last post…The key was properly positioned for most of your tests, this is just something you tried now. Sorry I can’t really comment on your second picture, will just cause more confusion….Again, you have tried to offset key in both directions?? If so, you haven’t seen much difference in idle/acceleration quality??
I wish you had a conventional mag plate to install and try, which would rule our timing theory in or out….