Congrats on the first bow! You're hooked now. Here's some things that may help answer your questions:
There are two types of backings for wooden bows: those that add performance and those that insurance. Those that add performance (e.g. hickory, bamboo, and sinew) will also allow for the induction of relfex and glue-up. Those that add insurance (e.g. rawhide, paper, fiberglass tape) cannot be used to induce reflex or correct set. Further, you generally only want to use one layer of these types of backings. Imagine a tree having two layer of bark, where is along for the ride and will eventually give way. I've seen too many bows ruined by adding two and three layers of fiberglass tape where one would be sufficient.
Now, in terms of your bow: Red oak and fiberglass don't mix particularly well. Red oak is not all that strong in compression and can be easily overpowered by a fiberglass, bamboo, hickory, or similar backing (all of which are incredibly strong in tension). Without seeing more pictures, it looks like your bow is not doing a lot of work in the inner half of each limb. This causes undue set in the outer portions of the limbs. Generally 2" of less of set is a standard margin to work within for wooden bows. Tillering past your draw weight, draw length, and/or profile problems can all lead to undue set, as can design (width, thickness, backing, length, belly profile, etc.).
If I were you, I'd toss this one up to a successful beginning. Get yourself another board/stave and make some shavings. With a bow that is clearly stressed at 69" with your 29" draw, I wouldn't pike (shorten) it to gain weight. You're liable to wind a 38 pound bow that shoots like a 25# bow if you do.
Build red oak bows flat and wide. They make great pyramid bows. Here's a link to a build-along I did of a simple red oak pyramid style:
http://tradgang.com/noncgi/ultimatebb.php?ubb=get_topic;f=2;t=000122 Also, here's a couple pictures of a red oak pyramid bow that was heat treated and pampered during the tillering process. It's also backed with butcher paper. It's dead flat unbraced, but still took 1.5" of set. That is, it started with 1.5" of reflex and settled to flat. Thus, this bow has zero string follow with 1.5" of set. Hope that makes sense