Re: 120 mercruiser stalling on wot
Since you are convinced it is not fuel related then it has to be ignition.
If the coil is supposed to have ballast resistance and does not it will basically overheat and saturate the two coils inside and spark goes away after a short time. (Verify the voltage at the coil as correct with the key on, probably 9 volts or so. If the coil has 12 volts and it is a stock coil then that is too high and the ballast resistance has been bypassed somehow, and the spark will not last long.)
If the coil is wired wrong, i.e. pos and neg terminals backwards it will start and run but spark will fade fast as the engine heats up. (Verify coil is wired correctly).
I would put new condensor and points in, gap the points per spec and then check them by a dwell meter and reset the gap if necessary to meet the dwell spec then verify the timing again. Recheck all connections, all must be tight and corrosion free.
Cap and Rotor can also affect how it runs when th engine is warm. Spark plug wires as well must be intact and not cracked and leaking spark out to any grounded part nearby. The spark plugs must be the proper type and heat range for the engine.
Back to fuel:
Are you sure ALL the filters have been changed? On older carbs there is a small stone type filter in the inlet fitting sometimes. There can also be one in the fuel pump inlet sometimes as well in the older applications.
Also be sure to only run fuel with the recommended octane level. Any higher then neeed can cause incompete combustion and leave deposits on the spark plugs.