[ConnClark]

Okay lets first get a few facts down

soot = incomplete combustion of fuel

higher intake temps = higher combustion temps = higher NOx emissions

higher combustion temps = higher heat loss to cooling system

To keep NOx emissions low in a diesel two main approaches are employed. Reducing peak combustion temps and reduce excess O2. Spreading the combustion evenly throughout the combustion chamber reduces hot spots where most NOx is produced. Reducing the O2 in the cylinder means the fuel spray has to travel farther to encounter enough O2 to burn thus spreading it out. The denser the intake charge the more mass the fuel has to heat and thus the lower the combustion temps. The colder the intake charge the more the fuel has to heat a given mass to get it into NOx production ranges.

The whole purpose of cooling the EGR on a diesel was so they could use it more effectively or use lessof it to control the NOx emissions and pack more excess air in the cylinder to reduce soot. The mixture of air and cooled EGR is more dense and thus more of it can be put into the cylinder on the intake stroke. This helps reduce the peak combustion temps and reduces NOx. This also reduces the heat lost to the cooling system and thus more power can be extracted from the fuel.

An ideal diesel optimized for efficiency would not uses EGR at all. EGR reduces the specific heat ratio of the combustion gasses and reduces the amount of power that can be extracted from the fuel. Instead of EGR spreading combustion throughout the cylinder evenly would be accomplished by controlling the velocity of the atomized fuel droplets so they would burn up just before they hit the edge of the combustion chamber. Additionally to maintain the ideal constant pressure combustion of the diesel cycle fuel would be injected in at a rate to ensure this. Since this is very hard and expensive to do it is not done.

In the case of a direct injection diesel engine EGR percentages are used to slow burn rate of the fuel. It aids in spreading out the combustion and thus heat evenly in the cylinder. The percentage can also be used to help approximate the constant pressure combustion cycle of the diesel cycle. IT reduces excess O2 content so there will be less for nitrogen to combine with to make NOx. It also increases charge mass that in turn reduces combustion temperature.

Increasing EGR percentages past a certain point are detrimental to efficiency however. It slows the burn rate of atomized fuel to the point it strikes the wall of the combustion chamber which in turn causes an incomplete burn. It slows the combustion rate to the point where the ideal diesel cycle constant pressure combustion isn't maintained. It reduces the amount of fuel that is burned by depriving it of O2. It also reduces the specific heat ratio of the combustion charge.

In conclusion More EGR in a diesel is not better. The optimum percentage used for efficiency will be determined by injector pop pressure, atomization of the fuel, droplet velocity, etc.... Even if you were to tune all your injectors to be exactly the same then you will be limited by the ability of your emissions control system's ability to control it accurately. Unless you really have studied, weighed and measured all factors involved and the trade offs, increasing your EGR flow is more likely to drop your mileage on a modern direct injection diesel.

Edit: I should add that I think changing your EGR system to a cooled EGR system will probably be beneficial to mileage.