Not having the engine in front of me, I don't know what you mean by cable drag. Vane governors produce very small forces - operating through one wire link is about maximum for them. If yours is supposed to move the inner part of a Bowden cable, I think it is set up incorrectly - there is no way it can reliably generate that amount of force, especially since the efficiency of Bowden cables is highly variable (as well as always being low). On a really old engine like that, if it is actually operating the vane governor through an ancient Bowden cable, it is no surprise that the engine scattered. Also, since the governor spring opens the throttle while the vane closes it, double governor springs is a good way to get the hot metal flying around even without a sticky mechanism.
Running the engine with the air cleaner housing in place, but no element, seems pointless to me, especially at idle. I think the suction created by the element would be greater than that created by the housing. I'd be looking for a way to hold the element in place without the housing, to do the idle tuning job. Or, if that really wouldn't work, I'd just attach a tachometer, then adjust the pilot screw in quarter turn increments by stopping the engine each time. You'd have to wait for the idle speed to stabilise after each restart, but it should work eventually.
