Idle drop by 500 rpm?

2.5 out? should be 1.5 max.
I think you should look for a vacuum leak.
Holley 750's are factory spec'd for 396 Chevy. if anything it would be rich for a mild 340.
The damn thing was fine.. the only odd thing was, I gave er a Lil wing, and a spit out the primary popped out. Never before w/ that combo....