Secondly it affects V1 because it means more derate or flex is available (up to the regulatory max of 25% rated thrust). Less thrust equals a lower VMCG (minimum control speed on the ground with aerodynamic controls used only), and thus a lower V1.
For the majority of cases it has no affect on V1 primarily because the V1 is based on a fixed CG position, the only time that you will see a change is if you use an Alternate Forward CG AFM appendix.
using a more aft forward CG limit. This enables an 'improved climb' performance to be gained by using some of the runway length acquired as a result of less drag
Why are you associating Alternate Forward CG position with Improved Climb? We have used Improved Climb since the B707 and that aircraft certainly didnt have an alternate forward CG.
The OP stated that the pax were in little groups, he didnt say if those groups were forward or aft.
Mutt