The timing helps accelarate the motor faster but it slows it down on topend with the higher rpm's, retarded timing would yield better topend results. The reason the motor seems to run better in the field is because the timing is making up for either higher then needed port timing and or low compression/wide squish clearance, these all affect the response of the engine from a rev standpoint.
The detonation coming in at 3/4 throttle would be the overlap of the needle/main jet period and the timing together. More times then I can count the number of burn downs are always on the needle of the carb, guys just dont take the time to set this up correctly and this is where you will burn them down even on a long pass, the very second you let off the gas, it goes directly to the needle from wide open, if there isnt enough margin in there, mr. squeeky will visit you. just because you have a big main jse will not solve the problem of burn downs when you let off, the needle will take out a engine if incorrectly set up every time, no matter how rich the main, if the needle and nozzle are too small, or way to lean of a set up. High timing advance in the mid range only multiplys this problem.
To machine those domes you simply need a arbor to attach the domes to via the spark plug hole, I just turned down a peice of steel and it has the sparkplug threads(male) on the end of it, you chuck it up and check with dial indicator for run out, then spin on the dome and check the runout, usually very close. If needed adjust to 0.
Once thats done you just use the cross slide on the lathe, set it to 0 or 90 degrees cut, when you just touch the dome surface, then you cut straight in how ever much you need to increase your squish clearance to, once this is done you adjust the cross slide to the angle of the squish, if you want 10,12,14 degrees whatever you want, tighten it up and then slowly turn in from outside where you first cut straight, till you come to dome opening. Its that simple. So in your case youd simply cut into the dome edge where the edge of the bore is on dome .025" to have .050" total squish clearance in the engine with head bolted on with o-rings. After the straight in cut, set up cross slide to what ever squish angle you want and cut em, your done.