I had the exact same problem on the exact same engine. It happened right after a tune up also and it turned out to be a faulty condenser. Do you still have the old one?
What is the timing doing during all of this? You have a timing light right?
How far does the timing advance at high RPM?
Did you measure the dwell with a dwell meter??
A timing belt is not going to stretch enough for you to notice at idle.
Well it drops BTDC and is retarded sounding.
Do you realize that BTDC is on the advanced side. Are you setting your timing BTDC or ATDC?
Also, you can set the dwell with a dwell meter without the engine running.
Trying to time it at idle. Like 500-1000 rpm. The timing is really just dropping as the engine rotates at idle, I was watching it drop on its own over a minute period of running, thats all the running I can get out of it... I have to realign the distributer to get it to run again. I hardly have time to even set the timing, about a minute and the engine is mis-aligned and timing is to low to run. Thinking about buying a new distributer & aux shaft but its only $330. I am at a loss still here....?????
Wait right there, your saying you have to re-align the distributor to get it to run again? that tells me your distributor isn't locking down not staying put now wonder your timing drifts out of range!
Sounds like a broken or loose spring in your distributor centrifugal advance mechanism.