If the original wheel & tire combination was able to be balanced with only two quarter ounce weights, I seriously doubt that the rim is severely out of balance. More likely they didn't index the tire properly on the rim, or the new tire is defective, or the person or machine used to balance this last combination isn't capable. Somehow I don't think even Harley would think over three ounces of imbalance was acceptable.
Not sure what you meant by the comment about the cheap weights versus the good ones, other than maybe the fancier looking ones with the little logo's on them. Doesn't matter, fancy weights or plain ugly ones, 3.5 ounces is too much. How about the original complaint, any difference in the "wobble" with the new tire, or is it exactly the same?
Jerry