Is there a power to muffler size ratio or better yet 'rule of thumb' to follow. Is it always that a bigger muffler will provide better performance, does shape or distance of pipe from exit port of engine matter ?

I'd hate to burn out or not get enough power from my engine.
Anyone out theer make home-made pitts mufflers ?

I am no expert on this. However I have seen a few pitts style mufflers cause trouble. The most common problem is lack of back pressure. Since the pitts has two outlets ,and most of the time no baffles,they tend to put less pressure in the tank. If you look at some of the better ones,Bison for example, the bottem of the exhaust tubes are crimped down a little.
If I was going to build one. I would try and keep the volume of the muffler and the size of the outlets, equal to the size of the stock muffler for that specific engine. Or at least get close to it. I would think this is more important than where the exits are.

David