First:  I have no excuse for not having pulled the spark plug earlier and provided its condition as part of my initial post.
Second: I don't think I'm running lean. I have soot on my rear brake lever arm behind the exhaust pipe and a very sooty spark plug.
Third:  The backfire (after fire) sound was provided as a data point for the sound.  The banging/flames I'm getting is NOT during deceleration or shut down.  I get it when trying to give it more throttle than a little more than idle.
Finally: Yes my cylinder head cover is leaking, thus the oil on the spark plug, and down the front of the engine.

Guys,  why should there be fuel pooling at the mouth of the carb? That sounds like high fuel level / float needle not sealing completely.  

I haven't had any carb issues on my bike so I haven't paid that much attention to it.  But, on previous bikes, whenever I saw something like this I looked for a float or float valve problem.

You may want to check the main jet, there is a washer installed between it and the needle jet , if it's missing it allows the needle jet to move down away from the jet needle and would cause you to start running  very rich when you first come of idle. it would explain the soot on the plug, and the gas flowing out the carb(reversion) ,and flames out the exhaust ( fuel ratio to high that there isn't enough air to burn all the excess fuel until it is ignited by the hot pipe ) as you should not be running rich with a full spacer and stock jets at sea level ,you should be running dangerously lean, even more so with a Dyna ,and your air cleaner.

Troyrr,  My answer above was addressing Lunar's problem.(he is at sea level and he is running stock jets ). I would order/find/ replace, the washer that is missing on the needle for starters ( not having the washer in place will effect your needle position). Then jet your carb to your, elevation /air cleaner / exhaust, which details you have not stated . Do I think your problem is the same as Lunar's ? the answer is no , there both fuel related, but flames shooting out the exhaust can be from running to rich Lunar's problem ,or to lean ,your problem .The missing washer allows the clip and therefore the needle to move down inside the spring, dropping your needle rather than holding it up against the spacer, the side moves up sending more air ,but the needle isn't moving away from the main jet ,your fuel mix is so lean it doesn't fire and gets pushed in to the exhaust where the hot pipe makes it explode , sending flames out your muffler, and that's also why changing jets  (no matter what size)has had no effect.