The governor indeed needs the cowling in place, as unlike many other mowers, and the Victa G2, the flag actually works of air deflected from inside the cowl.
With the gears, it's not to much of an issue, I just tend to make sure there is a few teeth left either side in both open and closed positions.
the excess fuel could be the result of simply the low revving, due to tuning, let ma know how you go with the clip, if you cant get one, I should be able to dig one up.
With G3's, I always find it pays to clean them right up inside and out with a bit of fuel and a tooth brush, dry all the parts and re-assemble, when you are done, make sure the spring is locked into the ring and governor properly, and then move the arm fully counter clockwise, here, set the ring so that the valve just tries to close up.
Then blow gently into the fuel nipple with the carby upside down, it should fully seal, turning it over should let air pass, repeat a few times to test.
When you are cleaning it out, float the float in some petrol for a little while, to make sure there are no leaks, and also make sure to clean the teeth on the throttle ring, and the corresponding teeth on the arm very well, to get all dirt out.
