To address the overheating issue of the original poster, is it possible the water pump drive belt is slipping?
It would make sense that as the rpm's built up there would be more strain on the belt as the impeller moved more water. If the belt tension was a little light, it could slip while turning at higher rpm's and grip again with less strain.
I run my 3GM30F at 2800-3000 rpms. It starts to smoke a little after that and I'm nearing hull speed anyway.