Cooled EGR system works:
Basically, if it's not cooled you loose compression power by its volume in the cylinders.
If it's cooled, you bring back up compression. A simple intercooler should do it.
After that, you may even increase the factory compression ratio of your engine if you have the money to do that, to level up the horse power of your original engine.
Adding more EGR makes this possible. There is less nox, the engine runs more cool and less knocking. Actually, you can see this kind of systems in newer eco but powerfull cars.
See it here:
http://docs.google.com/viewer?a=v&q=...Ca_N3pn0Jqz_pw