If you milled the jug 20thou then raise the exhaust a similar amount.

IIRC the US Engines 25cc carb is a WA-200. That should flow more than enough.

The steel cover I assume is the pump vent lots of guys modify?

Advancing the ignition will make the idle rougher (on almost any carb equipped engine), it's your choice to live with it or not. I wouldn't want to run 9000+ rpm on a regular basis, my Homelite research indicated that 8500rpm is more than enough for a Homelite that's going into a plane. I'd suggest using a bigger prop.

I'll be running in my new 30cc engine this week, hopefully enough to fly it this weekend. It has only the mods I listed except I'm temporarily running a drilled out stock muffler until the new pitts muffler arrives.

Just for your own info, a 25cc Homelite @ 8000rpm (16x8) will fly a heavy plane 15+lbs. Take a look at my gallery to see the beast I made. It's my first scratchbuild and far from perfect but it's been fun doing it all myself.