The red line on a babbit-pounding 216 is somewhere between 3000 RPM and 3500 RPM, as you mentioned. (GM says that Max bhp is 92@3300 RPM.)
The main reason is the babbited bearings. When you wind it way out, the babbit isn't supposed to be able to handle the weight of the cast iron pistons coupled with the heat from the friction, and softens up a little too much. If you were to swap out to aluminum pistons (and insert bearings), you could get away with winding it out further.
For comparison, The red line on a 235 ('54-'62) is 4500, IINM.
