I haven't used that type of goo, so I can't guess whether it will work well. If it is marked silicone RTV (Room Temperature Vulcanising) it is the same stuff Honda uses. Hardening stuff is no good because of thermal expansion. Non-hardening stuff that isn't RTV may or may not be good, but if a reputable brand, will probably be OK, though it may make it harder to get the thing apart in future. Worst case, it will leak, or you'll have trouble getting it apart - neither is especially serious.
You adjust the governor arm by loosening the clamp bolt, turning the shaft fully clockwise, pulling the top of the governor arm fully to the right (wide open throttle), and holding both shaft and arm in that position while re-tightening the clamp bolt. Be gentle with the clamp bolt, or you'll ruin the governor arm and it will slip on the shaft afterwards. That is the normal service procedure to ensure the governor is working properly - it will not make a difference to the maximum engine speed unless it is badly set up when you start. However if the valve clearances are up the creek, it sounds as if there has been amateur intervention along the way, so it is best to check everything and set it properly. Usually though, if the engine idles at the correct speed, any misadjustment of the governor arm on the shaft will reduce the maximum speed, not increase it.
The quickest and tidiest way to check governor speed is with a tachometer. I use one of these - it isn't notably good, but it gets the job done, in a fashion:
http://www.ebay.com.au/itm/Spark-Pl..._DefaultDomain_0&hash=item2a3c5ccb94The main weakness of this device is that it only reads in increments of 40 RPM, and that makes it a bit awkward to use it for adjusting idle mixture. It also has a built in battery that will go flat in a few years, and in theory it isn't replaceable. I'll test that theory when the time comes, of course.
