Scott,
As your mixture becomes leaner you have an excess amount of air. The extra air helps to cool the combustion. I believe what you are confusing is exhaust gas temperature and combustion temperature. As you lower your exhaust gas temperatures generally you have a more efficient engine (less energy going out the exhaust). That is why when you retard your ignition timing NOx levels will go down, combustion temperatures are going down which leads to less NOx formation, yet your exhaust gas temps will tend to go higher as the combustion is not efficient also causing higher CO levels and unburned fuel coming out the exhaust.
