They'll always rev high out of water, so I wouldn't focus on that. Also, avoid revving it out of water as it can damage your carbon ring. The good news if you damage the carbon ring is that you won't have problems hitting the rev limiter.
If your battery isn't charging, you have a stator, rectifier, wiring issue or maybe a blown fuse. That can't be your RPM issue, though, as you disconnected the red wire.
The 1997 really needs the slotted raves as the rave passages are smaller than 1996. The problem was so bad they made a TSB about it. I hate to tell you to spend $400 on rave valves that may or may not fix your issue, but there's a good chance that's your problem. You say you can hear the raves opening... But I don't hear the raves at all on my 96 GTX. I just get a sudden surge of power from 4-5k RPM and the thing GOES. But maybe one of your raves isn't opening, or opening all the way.
It really sounds like you fixed the carb issue. You could do another spark plug test at WOT to confirm, but probably not necessary. You said you verified that at WOT the butterflies are full open, but I'd double check that.
You could need new spark plugs, wires, or caps, but I don't think that's likely your problem. That said, plugs and caps are cheap and easy to replace. If you do, inspect the ends of the wires and maybe cut a small amount back if you see any corrosion.
It could be a MPEM with a weird failure, but that seems unlikely.
The likely causes are water regulator, mixture/fuel, voltage regulator, and raves. Honestly, it sounds like you've ruled everything out except the raves. I know you say you hear them open, but I don't hear mine and again, maybe only one is opening or they're opening partway. Also you mentioned that the bellows came apart when you pulled them. You may need new bellows, as mine take quite a bit of force to separate and clean. Maybe there's an air leak in the bellows making them malfunction.