Re: stock 350 getting about 8 miles a gallon?!
The Holley is a shame to waste, but needs to be elsewhere, I dont agree that a rooster is the best carb in the world. I do think it's small primaries make idle overload and such much less of a problem. If you know how to adjust one, and this can be fun, go to it.
A stock manifold, if it a 4 barrel with no adaptor, ought to be fine. If it is, odds are its for a spreadbore. A CFM of anything ove 600 is a waste on a stock, low compression motor. A stock spreadbore deseves a spreadbore carb, not an adaptor plate? Is your Holley a spreadbore? They do make some and so do others. Roosters are not the only ones.
The gas mileage you are getting is nutty, had a 74 350 in a Nova with the same kind of problems, yet it was a two barrel. Factory stock smog and emission controls and a two barrel. Had a newly built 350 with Edelbrock manifold and 1406 carb (650) that did 14-16 in a ONE TON VAN consistently. I got 10 or better towing a fully loaded trailer at 70-75 miles an hour. It's all in the basic setup.
Two things come to mind beyond selling the Holley. Ignition and proper venting of the motor to make sure you dont have a bunch of pressure blowing oil out. Stock distributor makes me wonder about the oil leak. Check stock gasket under distributor? Lots of folks leave them (dist hold down) a little loose because they have tuning problems and wish to move distributor easily. DONT?? Breathing of the motor makes me think about valve cover leak in the back near the starter.
Have a 450 Holley working great on a basicly stock 283 in a pickup truck. Had similar problems with that one when I first put this together cause my oldest son just had to buy another carb that I didnt recommend. I installed it and turned my back on his troubles. I soon won that debate. Gave That Holley away.
HEI is not a cure-all. It does make things simple. If you go that route, make it a good quality, new product. Make sure it has higher capacity module and coil installed and do not skimp on this. The GM original, a used one at that, may well give you good service at simple driving, but performance when you decide to test your rig, will let you down. May seem better than what you had, but the right way will astound you with the difference.
Someone mentioned plugs. The differences in spark plugs may seem minor, but having the right ones are a must. Only you know what you did but the engine must have come with recommendations. The plugs will be different depending on basic setup. Depends on pollution controls and such. Carburation has to be in tune with this and compression. What kind of compression did you purchase?
Just one last little thing. Did you get the choke setup right? Electric? Try running it without the choke plate ever closing? May be fun to start, but may answer the adjustment and gas wasting question immediately.
lastly, I think you did purchase a good engine product, but all manufaturers have lemons. if you cant make lemonade out of this one, I would complain loudly and find some satisfaction.