Engine Set Up- on the ground/in the air
The "splutter, then goes flat out" description sounds like you might be a tad on the rich side where the Lo needle is concerned.
Your question as to how lean an engine should be at idle is a toughie....
MOST 2C engines I've ever encountered in 25 years seem to like as lean an idle mixture as they can get. Whether they will transition from that lean idle setting to a blazing top end with any speed/smoothness is altogether something else. It's usually a balancing act. Not all carburetors are created equally. One problem with the "too-rich" low end is that it allows fuel to collect in the engine crankcase which is then thrown at the engine rapidly when the throttle is advanced. Instant smoke, gasp, gargle....you get the picture.
It sounds like your real close in your setting....just need a bit of fine tuning.
For fun....
Set the high speed as you normally would. With the engine at a normal operating temp...allow it to idle for 15-20 seconds. Smoothly, but briskly open the throttle to full.
What happens?
1) Sputter...smoky exhaust...stumbling acceleration? Too Rich.
Lean the LO needle slightly....1/8th turn....repeat the test.
2) Engine seems to almost "die" momentarily...then races ahead.
Engine too lean on the Lo needle....richen slightly. 1/8 turn.
Patience, Patience and more Patience. Sounds like you're close...just a little one way or the other and you should get it.
Good Luck!