Then, the piston is moving faster than the combustion shock wave, and the breathing is not enough to provide proper mix for each stroke, I believe.

In other words, your engine is reaching a condition at which the HP's begin to get reduced by "asphyxiation".

I am not sure how to solve the problem, but I believe in the solution of a bigger prop that was suggested above.

The mix may become too rich at that point (even when it is proper for lower rpm's), where the volume of air thru the carb throat reached the limit, and the spray bar "feels" a stronger vacuum coming from the crankcase.

For reach mix, the combustion becomes slower, and it drags behind the speed of the piston.
The retarded combustion shock wave reaches the exhaust port when it is already open, doing too little of useful power over the piston, and making that puff sound.

That is the reason for full scale engines to have means of advancing and retarding the spark that initiates the combustion.
Our miniature engines don't have that flexibility and operate properly within a narrow range.

Of course, this is only theory, but it could serve you to understand that your engine is OK, except that it may be "over speeding".

This article explains it better:

http://www.flyrc.com/articles/tune_your_engine_1.html