Yah. You want the flame front to hit the top of the piston at the right time (and also with as much speed as possible). A leaner mixture burns slower. So what you're doing is you're slowing down the flame front by leaning it out so that it hits the top of the piston at the correct time. You're compensating for a spark that's happening too soon. If you'd just retard the timing instead (and add fuel), you'd get the flame front to hit the top of the piston later (as desired) and the mixture would be richer so the flame front will be moving faster, so you should make more power.
Add some fuel and pull some timing.
Then again, it could be that the wideband data is wrong. I never trust a dyno's wideband, especially if it's a tailpipe sniffer. I only trust a sensor plumped directly into the exhaust shortly after the turbine exit. If it's the dyno's sensor, I want to compare it to a know good one first.