Did the 04.5 trucks still have problems with leaky injectors? How about a sticky brake caliper?
The LLYs weren't nearly prone to the injector problems as the LB7, but as with any diesel (or any fuel injector for that matter), it is a possibility. They did however suffer from wiring issues on the injector problem that could be linked to this issue, though generally drivability would noticeably suffer as well.
^the OP states that he has the ppe tuner set on 160 (is that 'kill' or 'piston melter' tune?)
It would take more than the 160 tune to melt pistons, unless you were using it with stock exhaust and towing heavy.
The 250 PPE tune netted a best of 25mpg (the DIC in the dash was saying nearly 40mpg
) but I usually got 21-22 with normal driving.
A few more questions, you never stated if you have oversize tires and if you are compensating for that? You could be traveling up to 15% further than the ODO says, if say you happened to be running 35s. Although with the PPE you should have corrected that while loading the tune.
Since you are running the 160 tune, I would turn the boost controller up a little to make use of the extra fuel, drop EGTs and probably get a little better mileage, especially if you have any noticeable smoke while driving.
Also, what kind of driving do you do? Your truck doesn't like going over 2000rpm on the highway for fuel mileage, which pretty much limits you to 65 mph depending on tire size. I know there was an easy 2-3 mpg drop between 60mph drives and 75mph drives on the interstate on my truck.
If you still have the Cat, it is likely it could be clogged running the 160 tune with the boost controller turned down.
14mpg isn't "horrible" but not good either. Keep in mind, the LLY, LBZ, LMM, LML RARELY get LB7 mileage numbers, so don't be comparing it against a 01-04 truck.