If I understand you correctly, these exhaust system flames are happening when you rev up the engine and then let the throttle snap shut: vrrrooOOOOMmmmPopPopPop!!
What's going on here is that a whackload of raw fuel is ejected from the engine when the throttle snaps shut, because there's insufficient air to burn it within the engine. The fuel hits the hot exhaust system and explodes when it reaches an area where there's enough oxygen to burn (catalytic converter!).
Why does this happen and how do you fix it?
"Wet manifold flashoff": When you rev the engine, you create relatively high manifold pressure. The pressure cap on your radiator teaches you that raising the pressure raises the temperature at which a liquid boils. It works the same way in an intake manifold: Raise the manifold pressure by revving the engine, and fuel that had been in vapour phase condenses and coats the manifold walls. Then you snap the throttle shut, the manifold pressure drops into deep vacuum (high engine RPM vacuum "sealed off" by the closed throttle plates) and all that condensed fuel evaporates ("flashes off") and stifles the fire in the cylinders 'cause it's way too rich to burn. Out the exhaust valve it goes!
The factory had a few ways of dealing with this: Make the throttle close slower, increase the ignition timing advance during deceleration, and modify the secondary air injection system.
A slow-closing throttle dashpot is not optional, but mandatory, on some installations. Sounds as if yours is one of them. It acts like those building door regulators that make the door close slowly instead of slamming: It causes the throttle to close gradually instead of suddenly. This allows air to enter the intake manifold during deceleration to dilute the fuel that's flashed off the manifold walls. The mixture keeps burning in the cylinders 'cause it's no longer too rich to do so, and the amount of raw fuel reaching the exhaust system is significantly reduced. It will not be hard for you to find a suitable bracket and the dashpots are, I believe, still available. The factory changed from dashpots to electric idle-stop solenoids in the mid-'70s, but rigging up a control system for the latter type of unit will be much more difficult for you than simply installing an appropriate dashpot.
A vacuum advance control valve as used in some '63-'69 versions of the Clean Air Package is a very, very handy device. It increases spark advance only under conditions of extremely low manifold pressure (heavy vacuum, i.e., deceleration) to give the rich, slow-burning deceleration mixture time to burn in the cylinder so it won't be ejected partially-burnt into the exhaust system. These valves are around; there's a guy on eBay who has them new, but you probably won't want to pay his price. A less costly way to experiment with this to see if there are gains to be made in your case: Connect the vacuum advance hose to manifold vacuum rather than ported.
Make sure your basic ignition timing and idle speed are set correctly and that your air injection system, if so equipped, is fully intact and working correctly. If the previous owner hacked the catalyst(s), then it's likely he also hacked the air injection system. Your '86 would have been originally equipped with an air-switching valve that would shunt the air injection to the exhaust ports under certain conditions including rapid engine deceleration. That way, most of the unburned fuel in the exhaust stream burns well upstream of the catalytic converter and muffler, greatly reducing exhaust system popping and flames out the tailpipe.
Was your '86 originally equipped with an oxygen sensor and Holley 6145 feedback carburetor? If so, an appropriate choice for a 2bbl carburetor is the feedback BBD off an '82-'84 Diplomat/Gran Fury/New Yorker Fifth Avenue with 318, and keep the \6's feedback system in place. Nonfeedback catalyst systems are the pits!
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I am guessing that this isn't very good for my catalytic converter. 
