The crankcase lever is the engine speed govenor. The operator control on the handle moves one end of the govenor spring. The spring is attached to the govenor arm on the crankcase, and via a rigid link, to the carb butterfly (throttle valve). The tension on the spring (which tends to pull the throttle open - the butterfly should be wide open with the engine at rest and the speed control at 'FAST') is opposed by a force generated by the govenor assembly inside the engine. The point at which the 2 forces balance sets the engine speed. More spring tension = more speed. The speed control on the handle sets the governed speed - more of a cruise control than a throttle. The engine will maintain the speed set regardless of load (within the power limits of the engine!).
What I suspect has happened in your case, is the spring has become damaged/stretched. Some versions of the engine have provision for adjusting max speed (by adjustng the maximum spring tension). If so, no problem, if not, new spring required.
Hope this helps!
phil_saunders(a)bigfoot.com
Phil Saunders, September 2009