This is a very common problem on the PW80s. Mine did it from the time it was new. Like yours, sometimes it would run properly for a few seconds at top RPM. I was told there is a rev limiter built into it, which is probably the ignition mentioned by the other poster. I kinda wonder though, since it occasionally ran well. I ended up boring the carb a couple of millimeters, and freeing up the intake, and it helped. Also mentioned, was the plugged exhaust. I think this may be the real culprit. The pipe is really restrictive. Someone told me to throw the thing in a fire every now and then and cook out the carbon buildup. I did it with a rosebud torch, and it worked well. Of course it needs a paint job afterwards. Another thing you may think about, is a top end job. These things have a reputation of running forever, like the PW 50s, but I found they went through rings a lot faster than I would have thought. If you go the track you will hear lots of the older ones making a funny sound which I found out was bad rings and worn pistons. Mine were really worn after 6 months on both bikes (PW50 and PW80), and I am really anal about oil and air filters. I ran Mobil 1 MX2T most of the time, but am not sure the Yamaha 2s isn't better for the air cooled bikes. And most PW dads don't do much maintenance, so I bet yours really needs a new top end. This should help with the power a bunch.
But don't sweat it, when you are ready to sell it, they go for top dollar on E-Bay all the time.
Hope this helps some.
Rich