Modern Drivetrain Swap into '65 Valiant

Hang on Scamper. If I understand you right, your car could 10 minutes or $100 bucks, from a new personality. You said


When you changed the rear, and the old one was NOT also 3.55s, then you have destroyed the relationship between the Governor and the Throttle pressure.
The governor pressure is directly linked to driveshaft rpm.
and Commands the shifts in "automatic mode" which is in drive.
In your case; lets say your previous gear ratio was 2.73s. Now with 3.55s, your Driveshaft rpm has risen by 3.55/2.73= Plus 30% !!
This causes all auto-shifts to come too early all the time. The only cure is to install a lighter-weight governor to reduce it's pressure.
But
Throttle pressure fights against governor pressure. So sometimes, you can increase the throttle pressure at the KD mechanism, to get back into the ballpark. I assume you have tried this, and did not receive satisfaction. This was the 10 minute shortcut.
Here comes the Hundreddollar fix;
Changing the governor out is gonna take a couple of hours but first, you need to get the right governor . This job is neither hard, nor complicated and requires no special tools. All it takes is time, and the part.
You can that part out of any transmission that was in a car that from the factory, had 3.55s, either 727, or 904. Or you can just call up somebody like A&A transmissions and for a bit of coin it will be in the mail to you. They can also hook you up with a new speed-O gear.
BTW, 727s and 904s can use the same governor parts.
After you get that installed, then you can fine tune the auto upshift speeds with Throttle pressure and Line pressure. This should be exciting to you, cuz in the end you will get exactly what you want, and it will be cheap.
As for the hiway rpm, there's nothing cheap about changing that!, lol.

In My Opinion, 3.55s are a great performance gear; I have been running them as my go-to gear since 1970 (no not the same ones,lol). But as you found out, they suck on the hiway.
In My Opinion, if you have to make significant hiway mileage, you HAVE to consider other options. A higher stall, more cylinder pressure, or a bigger engine would have solved your initial complaint, without the hiway rpm.

As to skidding out of control at speed; the posi/SureGrip will do that even easier than a peg-legger. So then; now that you have one, you will need to be even more careful on snow or ice or mud.
Happy HotRodding.

Governor Kits - A&A Transmissions

Lots of info, thanks! Years of searching the forum and I still don’t know this.

I don’t fully understand, however. Driveshaft speed doesn’t change with respect to engine speed and throttle, since the trans ratios haven’t been changed. I would imagine that as long as I’m full throttle the governor would sense the engine speed and shift at the appropriate moment no matter how fast the wheels turn. Does the governor instead also somehow work in relation to car speed? I did adjust the kickdown linkage and I think it’s how it’s supposed to be.

As to losing traction, I don’t think you’re entirely right in this case about the posi being worse. My motor isn’t exactly a torque monster and having to break two wheels free is undoubtedly harder than just one. But more importantly, a skid is way easier to control when the behavior of the tires is predictable. At least you can control the amount and direction of wheelspin when both tires are loose.