You're not violating any laws by refurbishing a 3.5 gpf toilet -- unless there's some peculiar law in California. Huh, maybe I shouldn't speak so fast.
There are two things that come to mind, especially if you have success by adding a bucket of water. I assume that you slop the water in there, which produces the siphon that the toilet is looking for. I'm guessing it doesn't work anywhere near as well if you pour it in super-slowly.
First, is the siphon jet hole (not just the rim holes) clear? That's the smaller hole at the bottom of the bowl, usually closer to you. If that, or the pathway to it in the labyrinth of molded china, is clogged, you won't get a siphon that clears the bowl. Accumulation of mineral scale or the like is one thing that can block that jet. On the rare occasion, improper plunging technique can push toilet paper or other schmutz back into that hole. That would be the first place I would look. Use a thin long brush or a gloved finger to reach in there and make sure there is no obstruction or accumulation of junk. And just monitor what happens when you flush. Does it look like there's a bunch of water rushing out of that hole to siphon the water out of the bowl?
Second, you may not be starting the flush with enough water, although I am guessing you would know if your water spot had decreased in size. Just double-check and make sure that you have the refill hose from your fill valve pointing into the overflow riser, and daylighted above it on a clip.
Let us know how it goes.
PS If what you are really saying is that you don't want to give up the 3.5 because you're afraid of the low-flows, go price a Toto Drake (original version CST744S) at the local plumbing supply (or CST744E if you want to take advantage of the watersense rebates that might be available in your area for installing a 1.28 gallon per flush version). Should be available in the neighborhood of $200-ish for white, about 25-30% more for a custom color, except black which is a good deal more. That's a well-made, dependable, workhorse toilet that flushes like a dream. We have two, and love them. You can see the reviews above if you click on the green box above. (Before you actually think about replacing your toilet, check and make sure that your rough-in is 12". That's the distance from the finished wall to the center of the closet flange, which can be determined usually by measuring from the finished wall to the center of the bolts holding down the toilet.) If it's not, no worries but you will need more guidance about what toilet will fit in the space.