I have a 1986 242 Formula. Boat is in excellent condition, trailer queen & freshwater all its life. Last spring I swapped out the oem 260hp Merc for a fresh 300hp mag mpi. (Alpha 1)

I am running a 19p 3 blade stainless prop. (Not sure what brand) anyway, at WOT the tach is around 4,000- 4,100 and running 46mph (GPS) any prop recommendations? Is 4k ok to run at WOT? If its "lugging " will it burn excess fuel? It seems to get out of the hole fine. I have a 21p Mirage plus but I know I probably need to go the other direction. (I haven't tried it as its 4k with the 19p)

There is more power at higher rpms. And you need them.
To get there get a shorter propeller pitch.
Sell the 21. My (smaller) 223LS won't max out a 21 pitch with a 420 horse 383 stroker. But my engine is not a stocker so I can go past 5000 rpm.
I'd say get you a 17" Mirage plus and spin to win. You want to reach 4500 or even more rpm.

Ballpark figure - 1" pitch is 200 RPM

What gear ratio on the Alpha?

Google mercury Marine prop selector.... very straightforward and you are over propped .. best results, as Bajaman was asking requires gear ratio for your drive (1.36 or 1.62)