Well, tires are only aprx. 4% larger than stock, so that's only 1/2 MPG. Were you running the A/C? That'll steal 1-2 MPG.
But if it's smoking, yeah, take him up on the offer to re-time. I don't remember the exact details, but it's supposed to be timed at a certain RPM (1500 or 2000, some such)...