When I was running the non-lockup 904 with my 5.9 engine, Hughes cam, kegger intake, stock throttle body, and a 3.23 gear I got a solid 16 mpg. I would think that you should be way better than 10 - 12 with your setup. And of course the rich smell shouldn't happen in the engine is running in open loop.
Try to dial in that fuel pressure closer to spec and let us know if that helps. If you're considering my Jeep regulator solution, note that I'm using the stock 5/16 steel fuel line, Tanks Inc tank, and a Walbro 190 lph pump. Just giving you all the specs because all these details might make a difference.