Jason Hi

Lets take your scenario of two identical airframes with the two different 20lb static thrust engines.
Lets say that at 200 mph the airframe drag is 20lbs, thrust equals drag and in that steady state my understanding is that the only way you could go faster in this scenario would be more thrust (yeh less drag as well for any pedants but then it wouldn't be the same airframe[:-])
If I understand correctly the issue of EGV and dynamic thrust would come into play in a different scenario....

Scenario two

Two identical airframes this time very very slippery, same 20lb engines as above and as per your scenario the two different exhaust gas velocities 400 & 1050 mph, I suspect that as the two airframes approach 400 mph the engine with the EGV of 400 mph is producing next to no effective (dynamic?) thrust and therefore stops accelerating. The second airframe equipped with the engine with higher EGV will continue to accelerate until either the total drag equals the thrust or until in this mythical case the dynamic thrust is zero, at I assume the EGV of 1050 mph.

Only my thoughts......

Phil.