Look, not to stir things up here, but Catbed, I think some of your reasoning is faulty. While a lower compression ratio is ultimately going to lower the knock threshold and allow for more power, the advantage doesn't materialize until the lowered knock threshold of a say, 8:1 compression ratio exceeds that of a higher one of say 9.5:1.
So say that all things being equal, you can run 15 degrees advance at 10 PSI from 3000 RPM to 7500 RPM on an 8:1 and a 9.5:1 compression engine, the high compression engine will ultimately make more power. Yes, there is slightly more space in the cylinder on the low compression engine owing to the piston dishing, but that's not what's making your power on the low compression engine, as you said, it's the increase in detonation resistance.
However, lets up the boost to 30 PSI and all of a sudden I need to start dropping the timing to 5 degrees advance for the 9.5:1 or even dropping the boost to 20 PSI vs leaving it at 30 PSI and at 15 deg advance for the 8:1, now the low compression engine starts to make more power.
What am I trying to get at, your comment about the low compression engine outperforming the high compression one doesn't hold true until you start running up against the knock limitations of a higher compression ratio, which can be pretty high actually. With water/meth I can hold around 18-20 degrees advance at 30 PSI on my 5556 and that's on an AEB CR of 9.5:1. So really, you're probably looking at north of the 250-300 WHP range before you start seeing the advantage of a low CR engine and by then you're probably north of 5000 RPM in your powerband.
Easiest way to look at it is this way: hold VE at a fixed 100%, assume infinite amounts of boost and infinite detonation resistance, which makes more power at a given boost level 5:1 compression or 10:1? But as you rightly pointed out, it doesn't work that way, sooner or later detonation will rear it's ugly head and you'll have to pull boost or timing. You just had it a little off on when it sets in, it doesn't occur as soon as you hit positive pressure, it occurs gradually and at a certain cylinder pressure threshold. It's also probably the case (and I'm guessing, but it makes intuitive sense) that detonation likelihood occurs logarithmicaly as boost increases, not on a linear scale.
Also, a higher CR will also have the effect of increasing the exhaust gas velocity as the piston raises to expel the exhaust gas from the cylinder. That said I don't know if it's negligible or not.
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