[mwebb]

first off
EGR is good -

EGR displaces
Air / Fuel mixture by reduce ing available volume in the combustion chamber by partially filling the combustion chamber with an INert gas , exhaust gas ,

so
EGR dilutes the air / fuel mixture , the entire air / fuel mixture , not just the 02 .
EGR does not make the mixture rich or lean , EGR dilutes the air/fuel mixture with an INert gas .

key word is "Dilute"

EGR reduces Combustion Pressure and by so doing reduces combustion temperature and by so doing reduces NOX formation

At Cruise , EGR does not function at WOT or idle on gasoline powered engines , but on Diesel engines - EGR does function at any load at the pleasure of the ECM
so

EGR does not reduce maximum engine performance measured in torque or horsepower .

EGR does increase efficiency by reducing
Suction Throttling loss
as Joe dumb driver just steps down more on the go pedal when EGR is active to get the same go as when EGR is Not active

EGR is good

However use of EGR does two things to control NOx. One it displaces excess Oxygen. Two it cools the combustion charge by requiring the fuel to heat more mass thus keeping combustion temps below that required to form NOx. One key advantage of a ceramic engine is you can have a much hotter combustion and therefore extract more power. EGR would negate this benefit. EGR also reduces the specific heat ratio of the combustion gases, thus limiting efficiency.