The MPEM is the brain, it's what controls ignition timing. You can (and would be better off) replace it with an MSD ignition module for about ~$320. This problem could be caused by a bad computer, but it's not likely. MPEM problems tend to be either all or nothing (in my experience).
Now, since you pulled off the return line and found it to be dry is a great lead. When I pull my ret. line off and crank it, it spurts out fuel like a dog onto a hydrant. You definitely have a fuel delivery problem. I wouldn't replace all hoses unless they're really brittle. I'd just cut the last .5 inches off and reclamp them. Having a hole in a fuel hose will give you all sorts of problems, I just had one EXACTLY like that, though mine wasn't major, just annoying. Go thru all the hoses and make sure all your clamps are tight. I forgot if you've rebuilt the carbs or when you did, but you could have clogged internal filters. Check your pulse line both at the block and at the carb, make sure it's not cracked. Make sure you're working with good compression as that is what gives you the vacuum that creates that pulse. If you recently replaced pistons, I hope you made sure that the arrow was pointing at the exhaust manifold (I don't think it would run at all otherwise, but idk). Hope this helps, got to get back to work