Varun,
I have grooved my ancient VW and am very pleased. I've done more mods than just the grooves and I am well past the 'norms' for my engine. Specifically, the normal timing is about 30 degrees modified or not. I have found the best tining for my combination to be 16 degrees. More than that it pings. Likewise, the normal mileage is 22ish mpg and I am getting 28-30.
It is possible your sluggishness at high speed (high rpm) is the advance being too large. The grooves make the combustion fast and maybe it's trying to push the piston down at high rpm, killing your high speed performance.
Regards, Eric