You cannot see the power valve operating from the outside of the carb. You are watching the squirts from the accelerator pump. The power valve still remains your "most likely" culprit.
edit: I realize I better expand on that a bit.
An engine that is idling or running at low load can tolerate a leaner mixture without damaging anything. When the engine is under load, the combustion temps go up, so for a safe measure, you must add extra fuel to bring them back down. If you run an engine lean under load, you will melt the aluminum pistons. If you run an engine that is coasting too rich, you foul plugs and build up carbon in the combustion chambers...not to mention you get poor gas mileage.
That is the problem. Holley's solution was the power valve. The valve is on the metering block inside the float chamber. It has a rubber diaphram that is sucked to one side by the intake vacuum. When engine load is low, the diaphram sucks a plunger to close a special fuel port. Mixture is now controlled by the idle screws (or main jets if you are cruising). When you run the engine under a heavy load, the vacuum in the manifold goes down, so the power valve diaphram relaxes and the special fuel port is opened. Extra fuel is added to the mix to richen the mixture.
Power valves are different for different applications. They are numbered similar to main jets, so you can choose at what vacuum the valve opens. Racers use a solid valve, that is always open...as they do not care about mileage, idle quality, and running at low loads. The real reason they do not like the valve is because of the rubber diaphram. The diaphram is exposed to intake vacuum, which means if the engine ever backfires...even once...the diaphram will rupture. If it ruptures, the valve stays open and even more fuel dumps through the split diaphram right into the intake.
If you have checked everything else, then it is most likely that your power valve has a ruptured diaphram. Remove the bowl and the PV is right there screwed into the metering block. you will have to read the number on it and order the same number PV replacement. Best to get 2, because, as I pointed out, one backfire and you have likely blown it.
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