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All things being equal, I think you will see a noticable gain from higher compression ratio at mile-high Denver.
But I've never tuned up there with pump gas, my experience has been with canned race fuel, which is real consistant. I'm not sure how much increase your engine will tolerate before it pings and you need to retard timing and/or increase octane fuel. I have a buddy who builds race engines (in Colorado Springs) who has some Pike's Peak experience (racing from 5000ft to over 10,000ft presents some tuning challenges). He would be an excellent resource.
You don't say weather of not your Rabbit has carbs or EFI (I don't know those cars very well) but another thing to play with, before I personally would swap head gaskets, is to jet the carburator(s) or tweak the EFI for high altitude on a chassis dyno. It is uncanny the amount of fuel you take away during tuning (reduced jet sizes), to get a carburated normally aspirated engine to run right when going from sea level up to 5,000ft.
Only after some investment in dyno tuning (couple hundred bucks), would I think about increasing compression ratio.
The increase in power I'm betting you'll realize from and increase in compression ratio comes from two sources:
1) Increased cylinder filling efficiency
2) Slightly more oxygen and fuel packed into a smaller space.
There are plenty of combustion theory experts on this forum that will do three times better a job explianing why, but most people miss #1. My experience is more practicle in nature, and have first hand experience doing nothing but raising compression ratio by 2 points and realizing almost 20% increase in peak power output at high rpm (race engine). I recently attended a talk that statused progress on raising compression to unheard of levels through a better understanding of the combusion event (with the goal to eliminate pre-ignition). Just when you thought the internal combustion engine was understood, some computer modlers come up with new diagnostic tools to lead the way 9hopwfully) to cleaner and better combution.
When I've raced at Denver with my car that is tuned for sea level, raising compression ratio or using a fuel with slightly less octane rating, advancing the timing 2-3 degrees, always helps get a little of the power back. Weather or not you would reduce fuel consumption is not known, but a quicker race engine tune usually means it's operating more efficiently.
Anyhow, it sounds to me like you are on the right path.
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