Hi 38
The Tecumseh service manual says both valves on L-head engines should be .008" to .012". Air gap between flywheel and coil should be .010" ± .002". The piece of blue plastic under a brick of Kraft Philadelphia cheese is the perfect thickness for use as an air gap setting tool.
If I'm servicing one of these engines for an older customer with less strength in their pulling arm, I'll file about 1/32" off the long edge of the flywheel key to effectively retard the ignition timing about 3º or 4º. This makes the engine a little easier to start with less chance of kickback but no noticeable loss in performance. Keep at it there 38, I'm sure you'll win in the end,
Sky