I just got done rereading this thread and getting out the manual. Without having the unit in front of me I'm also lost as to which direction to proceed, the best I can do is to offer a few suggestions, but I have to warn you I'm just guessing here. You say it is coming back through the carb, so here's a few things I would try.
1. When you installed the new valves, did you recut the seats and lap the valves in?
2. Are you sure that the governor is set properly?
3. Are you sure that the float level is not set too high, allowing the unit to be running too rich?
4. Do you have an adjustable carb, where you can lean out the high speed mixture screw?
I know that these may be redundant, but I'm at a lose also. Hope this does some help.