Ok first of when running in the grass yes your wheels do spin but thats not what makes your engine overheat. The overheating is due to the extra stress due to the grass. The grass catches the arms, chassis, along with any other things. The extra stress is what causes some engine to everheat not the wheels spinning as a higher rpm. The extra smoke you see is because the grass catches the exhaust and keeps it all in one place and it tends to stay longer. When your running it on the street theres nothing to catch it so it disperces a lot more. If you ever run your truck in higher grass the exhaust tends to stary longer then when running it in shorter grass. You would have to do it to truly see what I mean. The smoking of the cooling head could have been some mopister from the grass when you flipped it which sizzled off and caused some steam. There are reasons why it was smoking only after it flipped and not before.

I do not know what the needles should be set at as I do not have a 2.5trx or 3.3trx model. And for the shifting part the truck will take much longer to shift into 2nd gear because of the extra drag on the truck if it even will shift into 2nd. Youve got to remember that the engine revs much faster and higher when there is less drag on the truck.

I hope this helped.