The small case 40 turns a 10x6 at around 12,500 rpms. So your actual RPMs are in line if you around 12,000 rpms. A lot of factors can affect the RPM readings.
If the engine is loading up, then it is probably too rich on the low end causing it to load up.

One thing is to check the muffler pressure fitting. One can use a small 4/40 thread fitting with a small pressure vent hole and it won't provide as much pressure as the larger 8/32 threaded size pressure fittings that have a large vent hole in them. the 6/32 threaded fittings are sort of in between in size.

Now what muffler are you using? I ran across a muffler on a Eagle I 60 engine where someone used a lathe and made a new rear cap with a smaller outlet on it. So I thought I would check to see if yours had been modified any or is it stock. My best friend's son had put a snuffler unit on one of my small case 40 engine mufflers too, as well as a lawn mower muffler onto the end of a large case 40 muffler.

What fuel are you using? What is the nitro-methane percentage? Many Fox engines do not like high nitro fuel and do well with little to no nitro in the fuel. Fox wasn't a big fan of running the engines with higher nitro percentages in the fuel so his engines tend to have higher compression ratios and run good with little to no nitro in the fuel. Granted some of his higher performance engines would love higher nitro in the fuel.

I have had glow plugs flake out real fast, especially on new engines and not just with Fox engines either. Over the years i accumulate old used plugs. That is where you suspect a plug might be bad, but it still seems to work and glow nicely, so you save the old plug and put in a new one. Later I use those old plugs on other engines when bench testing to run the engines. I had a non-Fox engine once eat several plugs for a few tanks of fuel. After that it was good and stopped destroying plugs (weird).

I have some small case 40's, I plan on using a couple of them in a twin later, and when I tested them a couple of weeks ago, the carbs were acting all screwy. So I need to clean the carbs out good as they probably got all clogged up with congealed castor oil. I haven't had a chance to less with them since then though.