904 over-revs going into 2nd

So when you added the low gear set did you also grab the governor out of the donor transmission? If not, there's your problem. (With the lower gear the tailshaft still thinks the engine is turning 5500 but due to the increased reduction, you are actually running over 6000)

Later transmissions with the low gears used a 1.06" diameter governor weight, so you will need to swap the whole governor housing if you have the earlier 1.00" governor.