Maybe you misquoted "Empire" but advanced timing will put fuel in earlier, meaning less raw fuel makes it to the exhaust tract.
Retarded timing with a lot of duration could spray fuel late enough to possibly send raw fuel through the exhaust stream.
Did you try locking the converter in 2nd gear? Even if it snuffs the charger for a few seconds, you'll run quicker once the charger comes back up to full boost with a solidly locked drivetrain.
As you probably know, getting a tighter converter will make it so the rpm drop from unlocked to locked is much less maybe 400 rpm total and you'll be able to stay on top of the turbo during lock-up and possibly gain another 10-15psi boost from lock-up.
If you had a 12 valve, I'd tell you to just manually hold the 1st gear shift to 3600 rpm and then hit lock-up right away in 2nd gear.
Since your setup is defueling at 3200 rpm, you have no other option but to change the converter and/or turbo setup.