The timing does not lead to higher EGTs.. added fueling from the Smarty will cause your EGTs to increase.. W/a diesel if your gonna add more fuel for power you must increase air flow, i.e. many performance guys adding after market larger/more efficient turbos that increase air flow for the added fueling from larger injectors and programmers..
Actually, increasing the timing (injecting fuel sooner into the stroke) allows it more time in the cylinder for a more complete burn.. If you increased timing only (No Fuel) your EGTs will be lower.. The more complete burning of fuel is how MPGs increase.. More efficient fuel burn..
And yes, to much fuel (larger injectors, combined with Longer duration and earlier delivery of the fuel injection event) and to much timing increase will melt your pistons when making long WOT runs and allowing your EGTs to stay into the extreme levels... If you notice the Smarty SO6 timing settings are based on injector sizes, i.e. less timing for larger injectors and adding NOS.
To test this Run a odd Catcher#, say SW5, TQ1, RP1 Defualt Timing (TM2); make a few WOT runs watching your EGT gauge and Boost/Spooling. Then change only the timing setting to TM1 (stock), repeat the WOT runs and see for yourself the EGTs will be higher and the boost should be higher and it will spool faster cause of the hotter un-burnt exhaust gases.. If you don't have gauges then its a mood point in trying it until you have them.
FYI in the 2004.5 and newer year Cummins Engines the timing has been decreased and has added a post fuel injection event creating hotter gases heating up the added catalyst (added for 2004.5 and newer engines) in order to decrease exhaust emissions. And it keeps getting worse.. I toured the CUMMINS engine plant this past June and sat through a few seminars about the 6.7 engines and its crazy.. They are actually injecting and burning more fuel after the power curve to burn off bad emissions... I would say 1/8 to 1/4 of the fuel you are burning is for emissions burn off not power.. That is why they had to increase engine size to a 6.7 and fuel mileage is worse..