I think the only running 3-4° initial advance is part if not most of the problem. you need to get that up into the 14-18° range. I am not familiar with your Mallory distributor so you may need to work with it(weights, springs, total stops) to ensure this doesn't put your total timing over 38°.
You are setting it with the vacuum advance hose disconnected, right??
Lifter pump-up only happens in an over-rev situation, not in normal operation, you are looking in the wrong area unless something is wrong with the lifters from the get-go like incorrect sizing of parts in them, incorrect assembly, etc. Oil pressure alone, no matter how high it is, can't cause lifter pump-up. High pressure/thick oil only slows the lifters return to normal lash after it has been pushed into an over-rev over-clearance situation. Valve spring pressure is way higher than oil pressure.