Brake booster vacume pump.

It sounds to me like your advance curve is starting a little too early. One way to check, with a assistant, would be to throw a light on it out of gear, then check it again in gear. If it drops, then you may have to add a stiffer spring to allow the mechanical advance to start after the 1200 idle speed. I've had several cars that vacuumed in the 10/12 range and none dropped more the 2" in gear. Lets see if some others have a thought or two? That's just the first thing that came to mind.