First, it is fine to run a motor that high right after a rebuild ONLY if the rebuild was done right. Almost all of our motors are broke in on the dyno. Iloveboost LS motor was making 490whp and reving to 9k with only 2hrs of run time. I have had a few motors (one we bought and one I built) that had bad oil control rings. Both motors showed good compression (remember oil in chamber will increase the compression) and both motors made good power. All we did was change the rings and that fixed the problem. Did you get the block honed and what rings did you use? May just need a new set of rings.