From what I've seen, these engines from Evolution are tough and take a lot of hard use. I have a couple of smaller ones with a lot of time on them and it looks like they will last forever. As Earl said, they do wear some. You can turn the engine over by the prop and see if it has compression at the top. Are you using an OS 8 plug? If so, toss it and put in an A3 because all of these engines really need a hotter plug. You can do a quick check of the bearings by when the glow plug is out by turning it over and feeling for any rough spots, etc.

A lot of the advice you are getting is because it sounds like it is running too lean when you put the nose in the air. It's not a great test, but one everyone learns at some point. Earl is right about the muffler vent having an effect on it being too lean. Just out of curiosity, what prop are you using?