The speedometer had been recalibrated(I have since fixed) the odometer had also been adjusted( I have since fixed). I had to replace the whole cluster shortly before switching the tires and calibrated it for 14 inch tires. The numbers for a week were very low and I did in fact get pulled over for speeding(I was going five over, but speedo said dead on). Fortunately the officer let me off and sighted me for a dead headlight while she was requestig I not drive so fast. I happened to have been going to autozone to grab headlights and had them in the car so she let me off on a citation as well.
Yes it does take more revolutions, but the losses are much much smaller. It's kind of like reducing engine size. The smaller engine has to have a higher number of turns per tire rotations, to get the job done.
Of course to a point. Too small of an engine and you lose efficiency, too small of a tire and you have to complete far too many revolutions. If it were true that shrinking the tire always caused loss of mpg we would all have 18 inch tires. All econo cars have very small diameter tires. Also its not true that smaller is always better, I am pretty sure 12-14 is the optimum range.
Also found some logs of someone who increased tire diameter only.
Increasing overall tire diameter 4 more MPG
The thread talks about enlarging tire size to dupe the prius into allowing them to do 45 instead of 41 inEV, His logs since the tire change have been as erratic as they were before but most of his short trips have greater mpg than the long hauls. Could be attributed to his prius EV mode though.
I've got my old tires. I might throw them on for a few days just to get the data.