Larger gap = better burn = more power. I had no issue running 2.5mm gap on melted iridiums and VQ coils, it felt very strong still.
I have run many lean cruise tunes, up over 18:1. The exhaust temps are higher but still under 700 degrees from my experience. It does feel quite soggy as you lean it off, forcing you to feed on the throttle more and probably using a similar amount of fuel.
The best way to gain back the low end would be higher compression, 8.5:1 is never going to feel good NA with e85. 12:1 would be perfect I believe, with 15-20psi keeping the turbo in its highest efficiency.