The symptom:
In forward gear, with the throttle level pushed all the way to the cockpit floor, she will only get up to 2,700 rpms. However, in reverse gear, she easily goes up to 3,4000 rpms.
The differential diagnosis I have come up with:
1. At first I thought the issue was the throttle cable linkage. I checked it (as did a very good Yanmar mechanic) and could not find anything wrong with the throttle cable linkage.
2. Then I thought of the bottom and prop but both are clean with no fouling. I visually reconfirmed this the other day.
The prop is the original two (2) blade prop with markings indicating a 1982 mfg date - at least according to the surveyor. 12RH10 (1982)
When I commissioned an engine survey in NJ Jul 2011, the engine was revved to 3,400 rpms in forward gear at the request of the diesel mechanic doing the survey. This caused an engine overheating issue which has now been resolved. First, a clog in a hose from the water pump to the engine block was removed. Second, the engine block was flushed with a "rydelyme" solution. No more overheating - hopefully.

I am looking for additional possible causes for this 1982 Yanmar 1GM to fail to come up to 3,400 rpms in forward gear.
Thanks in advance for all suggestions, etc.
P.S. Got out sailing the other day on a friend's sailboat. Winds were 16-18 kts with higher gusts. There were six(6) of us aboard. The five (5) other sailors were very experienced sailors with many thousands of open ocean miles under their deck shoes. I was definitely the "tadpole". I learn something every time I go out with these guys. Great weather; great sail. I am sure S/V Bali Ha'i would have enjoyed the conditions.