Sounds like you're having a lot of fun with it. To smooth the idling you'll most likely need to bring the ignition back a bit, a smaller carb will also help mask that somewhat.

Yes, I'd run a 18x8 prop given those revs. 7000rpm on a Ryobi with that prop flies nicely.

Let us know how your ignition conversion goes, would like to see what's involved. At the moment they are too expensive for me.