i heard bad o2 sensors can decrease milage by about 3mpg i dont rmbr were but def read it somewere
my boy had the same prob i think it might be ur z32 filter he went back 2 a stock fuel filter & it got way better
your timing seems like i'd be optimal for maximizing hp but not for fuel mileage, i would change it back to stock.
yes a bad o2 will drop mileage noticeably especially on the highway.
another thing do you have a thermostat? might want to check your coolant temp gauge too.