Machine the head to boost compression. If you are getting pinging when advancing timing, its not preignition its too much timing. If you machine the head you can likely run pretty close to the same timing. You can also run hotter spark for little money. All you need is a better coil (coil=transformer, bigger ratio is hotter). You may be able to just get a coil from the junkyard that is a higher output. If it is a dist. ign, a hotter coil will jump the puny cap and rotor that you vehicle likely has.
As for filtering water:
NEW - Racor 500FG30 Diesel Fuel Filter Water Separator: eBay Motors (item 260679206018 end time Oct-22-10 01:26:46 PDT)
And, if you wash your fuel, do not machine the head on the vehicle.
On the other side of the fence:
My dad has had 3 cars given to him in the last year, two get better than 30mpg without a problem. I know, not everyone gets christmas all the time blah blah blah.
the fuel doesnt usually mess the pump up, it usually gets to the contacts on the fuel sending unit. this does not necessitate a change of the pump.