Couple of thoughts. Check the spark plug; make sure it's clean and
correctly gapped. Fresh fuel and fresh oil might help. As long as
the combustion is working OK, the governor should be able to maintain
speed with no trouble. Hmmmm. Though dirt (clippings, feathers,
leaves, ...) caught in the flywheel vanes could cause uneven air flow
to be delivered to the governor vane.
If it's still unstable after all that, I'd go back to suspecting the
ignition.
Those are the only things I ever found on my LawnBoy that prevented
great operation for over twenty years. Everything else that you noted
sounds correct.
Donald.
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