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Wierd, I've come to the opposite conclusion when tuning my car and logging consumption with VCDS. What is your idle timing? Stock timing on those cars is retarded from optimal timing for FE. By deleting the EGR, you are removing the ignition delay and decreased flame speed associated with it. Which have an effect analog to advancing timing. That might be the reason you saw improved FE. It doesn't mean it's optimal when considering other variables working in conjunction with the EGR rate.
When I increased the EGR rate, it also increased the ignition delay and reduced flame speed somewhat. In order to see an improvement in FE I had to advance the timing to compensate so ignition happens at the optimal time and all the fuel is burnt during the appropriate period. I am hoping that my .216 nozzles will help inject all the fuel in a shorter period to compensate even more for reduced flame speed. But until I get the IQ physically corrected at the pump, I can't tune further.
I've got an SAE paper where they tested fuel conversion efficiency of a DI diesel engine at various EGR rate and SOI timing at 1500 rpm. Best fuel conversion efficiency happened at 14% O2 and 5 degrees BTDC.
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