[Daschicken]

Want to reduce emissions? Lots of bad stuff happens on cold startup, an engine block heater can help that greatly. Letting off throttle more slowly(avoid sudden high vaccum) helps reduce unburned hydrocarbons. Make sure your EGR system is working properly and not clogged, that will reduce NOx(lower combustion temps) and reduce CO2(better fuel economy). Clean out the intake if it hasn't been done before. Make sure the spark plugs are serviceable.

You said the fenders were dented, and the car has over 300K miles on it, so clearly resale value isn't very high. You could cut the fenders right on the top edge of the wheel well and fold them in, effectively radiusing them like a 1st gen honda insight. Of course, this won't do much if you don't see high speeds often.

Toyotas often have overboosted power steering, so more gains for you there. I disabled the power steering in my 3300 lb V6 accord, its doable, but not for the weak-armed. Since you do mostly city driving, accelerating(higher rpms) and turning(actually uses the P/S), you should gain more from a P/S delete than I did. My delete was worth a little less than 1%, almost unnoticeable fuel economy wise. However, it did make the car accelerate noticeably quicker. And if you don't like light steering, well...you won't have to worry about that anymore.

I just recently went from 23.5 lb 17" rims with 25-26 lb 215/50/17 tires down to 16 lb 16" rims with 20 lb 205/60/16 tires. That's 12 pounds PER WHEEL! It resulted in noticeably quicker acceleration, likely meaning less fuel to get up to speed, and less momentum going to waste when it is time to brake. If you do lots of city driving with plenty of stop signs, that would be a great option for you. Mini coopers have VERY lightweight 15" alloy rims(12-15 lbs!), make sure your bolt pattern (4x100mm?) matches up with those wheels and see if someone is willing to part with a cosmetically damaged pair.

I'm just going to tell you right now that you are going to be disappointed in the gains that mods alone are worth without changing your driving style. Mods and driving style help work together and may offer a benefit larger than the sum of both.

As far as accelerating: If you have a free road ahead, try to accelerate at a rate that gets you to AT LEAST 2500 rpm. Moderate acceleration is actually beneficial for economy, but acceleration technique in general doesn't make much impact on mpg. If there is traffic ahead, and behind, you could accelerate slower, at a rate that doesn't make the people behind you angry, but also doesn't mean much momentum is wasted when it is time to slow down.