Howdy Steve-O and All:
Ron hit on a good possibility. Check to make sure that no exhaust is coming to the carb choke. If it is this will make the carb choke and idle system work very poorly very quickly. Look for exhaust contamination inside the choke bimetal spring housing. Even at it's best this was not one of FoMoCo's better ideas. New, the heat transfer tube drew unfiltered air, through the cast in tube in the exhaust manifold to heat it, into the choke housing by engine vacuum. Why they would draw unfiltered air directly into the carb is a mystery. It is not unusual, over time for the exhaust manifold to deterioriate/crack or otherwise degrade itself to allow exhaust to be sucked into the carb. The other possibility is for the hole through the exhaust manifold to become plugged. either could be part of your porblem. It is worthwhile to check this out.
I am also still concerned about your A/F ratio at idle. If the idle circuit is too lean it will generate more heat than usual at an idle. Your description of the way the low speed air screw was working is a great big question mark. How long has it been since you've rebuilt this carb. It may benefit from a good internal cleaning. I have very little experience with the Holley #1940, but know that all FoMoCo carbs are susceptible to dirt and wear. In the mean time, set the idle to the highest vacuum reading. You should be able to find a longer tension spring at the junk yard. Be sure to reduce the idle speed each time it goes up.
I know you said that you have checked the timing, but retarded ignition setting will generate more heat too. You might want to recheck it, and even try an increase initial advance setting.
I know you are committed to the heat transfer barrier solution, but I can't help going back to basics. If all is working as it should the additional heat barrier should help performance, not solve a problem.
Keep us posted.
Adios, David