I want to agree with the above post that the HP numbers for our model engines are basically marking hype. You can safely ignore them.

And LT-40 will fly well on just about anything. I've flown them with everything from an OS .40LA up to a .72 saito.

Yes, you can, and should, throttle back. I agree that going too fast is often a problem for new pilots. And LT-40 can float along at an amazing slow speed. It's important to teach students that throttle is another flight control, just like elevator, aileron, and elevator. It's not a "set and forget" thing. With a modern .46-.50 in the nose, the LT-40 can do level laps of the field at 1/4 throttle, easily. If you're really smooth, and you have the right prop, you can do it almost at idle.

Charlie, that SK engine problem sounds very much like the way the smaller Magnum engines that I own acted. It sounds like the engine developed an air leak, probably somewhere in the carb, like around the O-rings. I bet you could fix that engine with a little work with fuel tubing, RTV and maybe JBWeld.