The hooker tho is that the aircraft must go faster to produce the same lift. and the engine is producing less power
Yes but because of the thinner air there is less drag and going faster only helps with the effeciency. Also it is suprising how little power a jet engine or even a supercharged piston engine loses at altitude. This simulator can demonstrate that.
http://www.grc.nasa.gov/WWW/K-12/airplane/ngnsim.html