My scientist friend, who loves to track and analyze things, found that slowing down boosted his mileage way more than he ever imagined.

I take my foot off the gas and start coasting (assuming I'm not slowing to an annoying pace if there's someone behind me).

Wierd, we only balance and blue-print the engine and/or flywheel once and it seems to do just fine. Whatever was wrong with your car sounds like it was rather destructively serious.

So, if my Colt back in 86 got 42mpg can someone please explain why car manufacturers still need so much time to reach a mpg standard much lower than that?

I have better mileage by using FULL synthetic oil ,e.g. Mobil1; and by following MFR recommendation to use 91 octane (premium). The cost difference for both the oil and fuel seem to be exceeded by the savings. In fact with synthetic oil, the change interval can be extended where the car does not perform severe duty - see your owner manual. For my Toyota the change interval can be 7,500 for normal duty and I have gone 10k before a change of synthetic, and no harm done yet, it's at 130K and still running fine. Of course I commute uncongested freeway miles, with little surface or stop and go miles.

Mobil one is not full synthetic anymore

I bought some Red Line 10-30 online and am planning to put it in next oil change. I studied the specs, and it seems to have the best numbers overall. My LS-1--even with only 35,000 miles--has the piston slap, occasional lifter clatter, etc., which is pretty common on them. So I don't want anything but a really good synthetic. The Castrol Euro 0-40 is very good also, and so is Amsoil.

By the way that spreadbore 670 of yours would've operated at about 250cfm most of the time, while that 575 squarebore would've operated at about 380, there's your problem. Better torque delivery off the line with a squarebore though and optimal airflow with those specs will top out at around 600cfm on 5.0 litres anyway, assuming a 2.5" paper filament and very free exhaust.
Tried it on locally made 5.0 litres, the 600 squarebore holley was as big as you could go on the track without actually losing power, even though they came delivered with a 680 spreadbore (a lot of guys made the mistake of keeping that carb for street racing, though indeed better economy). In the 80s and 90s they were getting 550-600hp out of those 5.0 litre motors on the touring car track, using 600-650cfm depending on the circuit.
Same thing with the 780 carter on 5.8 litre clevelands and the 650 double pumper, though the cleveland is pretty thirsty, so long as you go absolutely ballistic mechanical lifters and the full bit it'll soak up a 750dp for around 420hp return on the street dyno'd (this is basically the showroom floor trim of the Phase III GTHO Falcons in 1972 after blueprinting). Funny thing with the 5.8 is the 2v heads race prepped actually get better times than the 4v ones.

And mate 4.10 gears are nuts. 3.5 is plenty for those specs, more than plenty. How did you get 25mpg, doing 35mph all over the state?
I varied between 3.36 and 3.55 gears at different times, that was plenty. I only chose 3.55 because I was doing drag runs more than circuits and lived in suburbia, when I was out further the 3.36 were definitely the way to go, could actually see 140mph, could do 100mph economically.

I got 31mpg highway (about 11mpg city, ahem with a heavy right foot but) so your 25mpg with 4.10 gears, 10.5 comp, a cam lift that suggests around 27/65 timing at least for OHV or any 2valve/cyl job and a 5.0 litre engine capacity in what, a 3200lb car? That's pretty bloody impressive.