I would think so too. But what is the voltage going into the gauge? That would tell you a lot more I think? What's coming out could be skewed.
Couple of things that come to mind. First it sounds like your grounding is good, since when you grounded the signal wire the gauge went to full. As it should.
Did it go well past the full line though? Or stop just near it? Should go way past it if I'm not mistaken. Maybe someone will know for sure.
I see you have a '74. Some newer info just came up recently and I think that might be one of the years with the different ohm range expected. I'd literally never heard of that until just this past year, but apparently Ford had two ohm ranges!
Don't know if it was just a fluke, or a running change across the entire lineup of Ford products, but while not a huge change, it's enough to give you a headache trying to track down the reason for strange readings.
You don't happen to still have your old sending unit by any chance, do you? Be great if you could verify it's readings. Especially if the gauge read correctly before the tank swap.
Don't know where your tank is from, but we verify that each and every sending unit falls into the ohm range at least for the ratings that we've come to expect as "stock" for all EB's. But if that info on the change is correct, then that would explain a lot of things.
If so, looks like someone is going to have to come up with a fix, or else everyone who has one of the changeover models is going to be dealing with odd readings. If I remember, the change was not a lot, so maybe it's as simple as adjusting the stops to hold the float arm up slightly when empty, and/or down slightly when full?
Is your IVR a standard type, or one of the new electronic ones? If the old type, you'll get a pulsing voltage reading coming out of it. If electronic, you would have a steady signal.
The pulse is very obvious on an old analog meter, but sometimes hard to tell with a digital one.
Did you also verify the voltage readings coming out of the other gauges? If different, that might lead you to a faulty gauge, rather than an incompatibility issue with the sending unit.
One thing I've found over the years is even with new sending units, the matching of the gauge and wiring to the unit was more important than just matching the book. I even had to adjust factory sending units on my '71 to get them to read correctly. Which they'd never done since almost new. A few tweaks and the gauges read perfectly after that.
Just thinking out loud here. Sounds like your wiring is in decent shape since you did not find a voltage drop between the output of the gauge and the sending unit (2.5 volts at both ends) but you never know.
Good luck.
Paul