The solid handwheels are better for use with motors. I'd suggest changing it out with a solid handwheel. You'll put less strain on the motor and will probably have an easier time sewing thick materials. If it were my machine I'd put it on a treadle base, though. I'm jealous - I went so far as to convert a Singer 201-2 potted motor machine to treadle since I couldn't find a treadle or belt driven 201 at a reasonable price.
There is an easy fix for your tension problem. (Although, I should say I think it's fairly normal to have to adjust the top tension really high when using thick thread.) With regular thread in the machine, adjust the tension until the stitches look good. With a thumb on each side of the number dial, push in on just the black number dial, releasing it from the pin that holds it in place. While the number dial is still pushed in, turn it until the desired number (usually 4) is on top, then release it, making sure the pin goes into one of the holes on the number dial.