Hi Slippery Pete,
Ask them to explain why “better burning” (which obviously they are implying means less unburnt fuel being wasted) causes the EGT to reduce.
Er... I'd say that if the fuel was burned completely by the correct moment during the cycle, then more useful work can be extracted from the energy supplied, therefore you would need less fuel compared to the inefficient cycle, therefore the EGT would reduce.
Your engine X may be very efficient at low RPM, because the combustion is completed by the time the piston is at position Z. However it is not producing as much power as a faster revving engine.
As the revs increase, we need faster burning (hence higher compression ratio) so that combustion is complete by the time the piston is at position Z.