I'd say that 18% oil WILL perform better than 20% oil, everything else being equal. This would be very difficult to prove, since the oil reduces friction, and lowers the operating temperature as well.

However, it remains that the oil content is NOT a power producing component of the fuel/air mixture, so the more oil you introduce into the mix will produce less power. I have to add that a small amount of extra oil, such as what comes through the breather, shouldn't make much difference in power potential. Still, it WILL reduce the power potential somewhat, the same way that reducing methanol content will. In fact, that is EXACTLY what it does!

However, drilling into the carb body may have been the whole source of his loss of power. Who knows how this has actually effected the overall power potential of the engine?

If this were MY engine, I'd get a new carb body, put the stock muffler back on, and then run it to see what my power output was. Or else, I'd just accept what I had created... Not all experiments have positive results!