No, this is NOT normal
Dave is right. Black soot from a deisel means the engine is being lugged. Typically, this means you are overpropped.I'm going to assume you mentioned 3500 rpm because this is the rpm where the manufacturer rated the engine at max HP. The engine should 'cruise' about 200 to 300 rpm below that which should correspond to peak torque. A torque/HP vs. rpm curve would come in handy and is available from the manufacturer.If you can't come up beyond 2500 rpm, then, as Dave stated, you probably have to large of a prop. But another possibility is to large an alternator. For example, a 120 amp alternator draws about 9 hp at full output. A 75 amp alternator draws about 5 or 6 hp. Assuming a 75 amp alternator at full output, you would only have 4 or 5 hp left to drive the boat. This is probably inadequate and the problem could appear like an overpropped engine.But the bottom line is the engine is being lugged. Check with a good marine mechanic. I know that Volvo-Penta requires their licensed service dealers to be able to size a prop for a specific boat.Russ