Unless he's modified it, the '78 has electronic ignition, no points or condenser.
Its hard diagnosing carbureted engines over the Internet, but I would stay with it being a fuel problem. Have you messed with the float lately? Since it smooths out when you open it way up, I would not be surprised if its giving too much fuel. It may be the new fuel filter is less restricting than the old one (or too restricting). I don't know what model Holley you have, but if it has an external adjustment try to adjust the Needle and Seat (on top near the fuel inlet, not the idle adjustments at the bottom).
Its been many years since I've adjusted one, so visit Holley's website for detailed instructions. But basically put it on absolutely level ground, unscrew the sight plug (if its the old non-clear plugs, or just look through the plug if its the new clear style), and adjust the float level with the ***** on top until the gas is at the bottom of the sight plug [hole]. If you have too much flow like I suspect, it may pour out of the sight plug so have a spare rag at hand. And keep it away from the distributor. If it overflows like that, shut the engine off and adjust the float down before restarting it.
And BE SAFE. Fire hurts her more than it hurts you.