If it lost that much power it was way too lean..Better take the cylinder off and check for a partially stuck piston.....You're lucky if the piston is still good......
The needles are there for a reason..You should set the high needle a little rich on the ground to allow for the mixture to be correct when the engine speeds up in the air..NO MANUFACTURER CAN POSSIBLY PREDICT THE CORRECT NEEDLE SETTING FOR EACH INDIVIDUAL PROP AND ALTITUDE. It's just an educated guess..The best they can do is try to get it rich enough so the engine will not be too lean the first time the customer runs it....
If you start with the needle 2 turns out and lean if from there, set for max rpm and back off about 300....
Good luck with your cylinder and piston.....