[MetroMPG]

The theory behind increasing EGR is that it's depleted of oxygen - so it's inert in terms of aiding combustion.

By reducing the amount of oxygen in the intake air, you're forced to run at a wider throttle opening to produce a given amount of power. The ECU will (try to) ensure you don't run rich in the leaner air with feedback from the o2 sensor.

The wider throttle opening should reduce pumping losses and increase efficiency.

Assuming... the added heat in the EGR doesn't reduce dynamic timing.