phftttt! I don't know about the rest of you, but I don't feel right running 3500 rpm in first gear while cruising through the neighborhood. And lugging isn't just based on rpm, it is load versus rpm. So if you're just maintaining speed on that level piece of road and the rpm's are 2000, that isn't lugging. Lugging is if you then decide to get racy and pass someone, or climb a steep grade, without shifting down to an appropriate ratio.
Regular riding, not trying to race anyone from a light or impress the teeny bopper in the convertible in the next lane, there is nothing wrong with shifting at a point where the rpm's drop back to 2000 after each shift. If H-D can't make their parts strong enough to withstand that, they need to find a different business to go into. Maybe they could become the USA distributor for a Chinese chrome plating company? (Oh, they already are in a way - never mind.)
BTW, the original post mentioned the top end on the bike having the problem. That's not where "lugging" is going to be a major problem anyway. Lugging is much more likely to pound the crap out of the rod and crank bearings or twist the crankshaft.
Jerry