I believe you're right. There are a few racers/builders who have utilized the PW3 that I've spoken to, and they've all reported an increase in power in the top end with some fiddling with timing as John has mentioned in a previous post, with a lot of fiddling with exhaust and intake to fill that hole in the middle you mention, and/or a 5 or 6 speed.
That cam in the 500 only sounds good, because that motor does rev much more freely, particularly with the lighter piston/long rods. It could be pretty fun to build and run the small motor instead of thinking I can build a big cc hotrod and not get into too much trouble. The roads here are tiny and twisty, or way over capacity, so a big hotrod can't really be used to it's full potential.
I've already got a good SS cam that I'll probably use in the motor to play it safe with the relatively fragile 88ss crank. When I started this project, there were fewer time and money constraints than there are now, so less fiddling and more riding sounds better and better.