What it boils down to (pun intended) is that a lower temp t-stat can provide better power (and even economy by adding timing at part throttle cruise in some cases) by reducing under hood temps as well as combustion temps. Now, key factor here, your cooling system must have some overhead included in order to take advantage of the lower t-stat.
If your cooling system still runs up to stock temps after installing a lower stat, you simply need some help. Things like adding Water Wetter, turning the fans on sooner, enabling longer duty cycles for the fans, swapping in bigger/better fans, swapping in a larger radiator, etc. can all help improve this "overhead" in a given cooling system.
Just for reference sakes: In my Trans Am, I'm up to 38 degrees of ignition advance on mid grade 89-90 octane (40 worked without ping, but netted no gains, so I went back to 38) at cruise throttle positions and pull down 26 mpg with old school iron block and iron headed V8. All due to a 160 stat, a cooling system that can handle the overhead, and careful logging/tuning. At stock temps (210-220ish), I had ping at 30-32 degrees depending on conditions with premium fuel. I can sit in totally locked traffic on a 100+ degree day with the AC at full blast and not go over 165-170 degrees with the stock radiator. Of course with the new 383 I'll have to get a 3 row aluminum jobbie, but I don't forsee any problems running low temps on that combo as well.
