It is possible the adjustment screw is not right. I'd recommend adjusting it to where it no longer backfires!
the quick and dirty way of tuning it is to turn the screw in until the bike dies or the idle starts to fumble, then to count the turns out until the bike idles funny again, and set the screw halfway between both.
Any intake/exhaust mods you do will negatively impact fuel economy, but will get you more power. That being said, putting a different exhaust on is a pretty strongly encouraged mod on these forums. I have the jardine and love the way it sounds. It is what the name implies, a slip on. unbolt the old one, slide it off, slide the jardine on and clamp her down. then check for leaks and adjust the carb if necessary.
there are two "K&N" mods: the drop in filter and the pod/cone filter. The pod/cone filter involves taking out the airbox and putting a pod/cone filter on the carb. the drop in filter just drops right in to the airbox.
There was a post a while back that had a comparison between air filters involving air flow and particle filtration. if memory serves me well, the K&N did poorly in both regards.
I'd recommend LANCER's jet kit. He has an ebay store (savage_performance maybe?) and is a well respected member of these boards. The kit I got from him came with three or four main and pilot jets, a carb bowl gasket, and a few washers for the white spacer mod.
use the search feature on the forum and look up carb jetting (you'll find volumes on the topic) and other mods for the bike. in the tech section look at the Table of Contents post which provides a quick and easy summation of all the popular maintenance and mods for the bike. BurnPGH had a post a while back that very nicely outlined the different "stages" of mods to the bike depending on how greasy you were willing to get.
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