No, this is not always the case. The most powerful, fastest and quickest light truck based diesel engines in the u.s. drag racing right,now are sitting around 12 to 1 compression (power service dragster and scheid diesel dragster) 3000 ish hp 6500rpm and much more than 100 psi of boost.
The same principals are applied to sled pullers. (actually, pulling methods were applied to these engines.)
If I am not mistaken, that vw idi should be sitting somewhere between 19 and 21:1 comp ratio. Yes, it's easier to start, and helps the precup warm up and run without as much smoke while cold.
Losing a whole point of compression will not hurt much in the cold start department(esp if glow plus are still utilized) and may even result in MORE hp, as timing can be added without detriment to the peak cylinder pressure. Another benefit of added timing is cooler exhaust temps. Diesel is a slow burning fuel, start burn sooner, more energy released in burn (to a point) it will also cool off sooner, not torching exhaust valves or exhaust edge of piston crown.
Steve, higher hp cummins guys bevel the top of the piston side.
From top Of top ring land to top edge of piston crown, .010 to .015 taper is cut. It allows for,more agressive heat expansion without sticking piston in cylinder. Also it retains stock bore. (egt over 2000 dg can be had of fuel is kept off the piston)
Are you allowed to run straight water injection? Or is that out of class rules?
What egt, boost and iat levels we're you seeing at max?