As far as not reaching top Rpm make sure the carb is opening all the way. Those rollers and arm assembly are not the most durable. How do you know its only reaching 3400 rpm.
Put it all back together. Then run it up to temp and spray Ring free, engine tune or something similar through the engine. But you can look straight up the exhaust tuner with the lower unit off.
Spraying oil in the cylinders and testing compression right away is a false test. If you spray the cylinders with oil wait overnite then do the compression test.
For anyone wondering what will make grown men lose their mind, or want to see the "figment" here it is.
https://www.sharrowmarine.com/?gclid=Cj0KCQjwhqaVBhCxARIsAHK1tiP_4icJHU3yETaGA-cOjR8Nb4Dsc7qjAJUiSSH1YPnwX0Aq6MduWUoaAqVeEALw_wcB