Sorry to take so long to get back to this thread, but life happens. I got a new distributor and installed it with 2 gaskets under the flange where it snugs to the block, giving me about 050 additional clearance from where is bottoms into the boss in the bottom of the block.
Repositioned the distributor so the advance won't come up close to the intake as well. I got a cheap HF dial back timing light to compare to my old Craftsman and it checks out the same. Odd thing is it's running good now with about 15* initial, and I may roll a few more * into it. But weather sucks so I can't get it out and drive much I need to adjust the valves again as well. 
I dumped the oil, I only have 35 miles on it, but wanted to get any aluminum out that the distributor had shed into it. I cut the filter open and lt caught a good portion of it. I did have a LOT of glitter in this oil dump, but I attribute it to everything being new and finding its home. I still don't like to see that much. I filled it up with more driven break in oil. So time will tell. 

Yeah, Ted I measured it against the original 56 distributor, and just did again and they are both 5" from the base. Gear width is the same, diameter is the same. 
Here is a photo of the gear mesh. 

 

It’s good that you caught that distributor issue now instead of just a few miles down the road.  Extended running like that does force some additional wear at both the distributor gear and the gear on the camshaft.

It’s always prudent to measure both the distributor block cavity depth in the block and the gear placement on the distributor to ensure that the distributor gear placement is not more than the block measurement.  I have come across my share of Ford V8 distributor block cavity holes that were less than specification and that does force the distributor gear to be relocated in order to compensate.  The 351W engines seem to be the worst of the lot but have come across the problem in the 460 Fords and the Ford Y-Blocks to a lesser degree.  What few Pertronix distributors I have dealt with for the Ford Y have always had the gear located at the Ford specification but…..  if that hole in the block is on the shallow side, then the distributor gear will have an interference fit or said another way, will be in a bind when the distributor is tightened down.  As a FYI, the MSD distributors for the Ford Y have always had the gear placed on the shaft at an amount less than the Ford specification and I suspect this is to compensate for those blocks that may have a distributor cavity hole that is less than factory specification.

Just food for thought and something else to check.

Lorena, Texas (South of Waco)

My FBO Ignition setup calls for:
14° initial timing at idle with no vacuum
Full (not timed) manifold vacuum adds 16° at 16” = 30° at idle
at 3400 rpm 22° = 36° all in




.150 Stroked Y-Block:327.25 ci @ >1hp per ci
 

The original Ford distributors don't have a bottom bushing, although having one should be an improvement over the original design. Other than that, all I can say is That Sucks!

Welp, looks like I found another problem. Pulled the Distributor so I could reposition it to have more clearance for the VA. as well as put lighter springs in it. And found this. Looks like the bottom bushing is eating the housing of the distributor? Needless to say I'm not pleased at what could be circulating through my brand new engine. Lots of end play, and some lateral movement. Needless to say it won't be going back in. I'll be calling Summit and Pertonix tomorrow.

I stand corrected on Howard's advertised rpm range; it's 1800-5000, not 2000-5000. 

Ted the roller timing set from John has provisions for dot to dot straight up alignment as in most engines, as well as the ability to confirm and count 12 pins. It was not degreed. I can't tell where the timing is all in at as my tac is in the cab, and I'm by myself. 
I'll try to hit up a friend and see if he has a dial back timing light I can confirm against. I've got some work to do for sure. 
Thanks again. 

Indian, you probably are aware that Howard's advertises an rpm range of 2000-5000 for that cam. It could be that you simply need to downshift to 4th to bring the rpm up. I've not owned any vehicle with automatic overdrive that didn't immediately shift down whenever applying just slight pressure on the pedal. Years ago, my dad's 63 pickup (won't mention make) with 3-on-the-tree manual and overdrive would do the same. In your case, it requires a little more effort. With just 20 miles on the clock, maybe you just need to give it a bit more time. I would expect at least 14 inches of vacuum, but your elevation might be enough to bring it down an inch. Nevertheless, keep us posted. 

I would check your timing light against a known good one.

Was the camshaft degreed in or simply installed at 12 pins between the marks?

How much total ignition timing?  And at what rpm is the distributor timing ‘all in’?

Lorena, Texas (South of Waco)