Carb tuning eh?

[vtwinsport]

Hey all,
Got a question. Here's some background;
1. rebuilt 350 in in a 76 C10, th350 trans, edelbrock 2101 intake, edelbrock 1406 car, hedmann headers into new duals and pipes, msd streetfire diz with vac.
2. been tuning the carb, timing, and vac (ported and manifol) for months now.
3. have had timing as high as 14 down to 2 and was most recent at 12 btdc, at 12 and anything above 6, exhaust spits out water on ground and plugs read tan and clean, with vac at manifold and mileage is about 6-7 mpg
5. now is set at best operation with timing 4 btdc, vac at ported oulet and water from exhaust has stopped, plugs read mildly sooty but performance is all round better including pickup and mpg is closer to 10-12

First question, was that fuel coming out my exhaust? it didn't smell really gas like.

Second question, better mpg with mildly sooty plugs? Is that possible? Isn't it running richer with the soot?

Thanks in advance for all comments.
greg