[mwebb]

yes EGR reduces combustion efficiency
but it also reduces the effective size of the engine by the percentage of EGR flow
so add 30% EGR flow to a 3 liter engine
and
the engine becomes a 2 liter engine ... shazam ,and engine efficiency is increased by reduction of suction throttling loss if the operator chooses to maintain the same amount of "go" with EGR at 30%

..."When EGR is on, combustion efficiency drops, which requires more Oxygen and fuel in order to produce the same level of power asked of the engine.

Very basically, the calculated load would be ((old VE + extra VE) - EGR).

Actual mass moving through engine would be something closer to (old VE + extra VE + EGR)
"...

no
actual mass will be Old AF mixture mass less the mass of the Old AF mixture that was displaced by the EGR .
plus the mass of the EGR .
until
the driver steps down on the throttle IF the driver feels the need for more "go"

so essentially
the mass of stuff in the combustion chamber is UN changed by the addition of EGR
until the operator requests more " go " IF the operator request more " go "

so
EGR in and of itself does NOT increase combustion chamber content mass
and the presence of EGR in the combustion chamber reduces
combustion pressure
combustion temperature
and NOX ,
relative compression and relative engine size are reduced .
suction throttling loss is diminished

all good things . when discussing FE .
so EGR (when in use ) creates a smaller engine with lower compression and less suction throttling loss , relative to a NON EGR type system
to restore big er engine power
switch off EGR , KISS .

in fact it (EGR) reduces the mass of air fuel mixture in the combustion chamber at the time.
in fact systems with too much EGR flow at the wrong time can reduce the max amount of " calculated load "available
by a substantial amount
which
also
increases FE . if the system is not flooded with EGR gas and misfiring
======================================
suction throttling loss

in Geo metros
cars with broken or poorly operating EGR end up with reduced FE compared to geo metros that do not have broken EGR systems