Have you tried adjusting the spring pressure of the governor ? when i tried to adjust the max. hp of our 5245 i adjusted the wrong spring: It wouldnt go over 1000 rpm anymore. when i put too much tension on it, it was very unstable and constantly adjusting the revs up and down, as you describe.
If you put more, or less, tension on this spring, it should adjust the revs better. I assume that yours has too little tension, because normally the spring would not get stronger over time, but weaker.