There are two ways to put the computer in Diagnostic Mode, you found one of them! Those (2) wires, as you guessed, should normally be disconnected unless you're checking for trouble codes.

The other way to do it is to short out the (2) pins in the corner of the ALDL plug (likely the large black plug you found).

There's one other set of wires in there that you should be aware of, for the ESC (Electronic Spark Control) disable. Normally connected, this set of wires with an inline quick-disconnect is unplugged when you're checking the engine's base timing.

If you don't unplug these wires you can't read the timing on the scale, due to the way the ESC works.

With the wires unplugged, it acts just like any old Stone-Age points distributor, as far as adjusting timing goes.

Your Troop will run better with a bit more advance, if you're in there checking you might increase advance from the stock setting of 10 deg BTDC to 13 deg.

And you're probably right about the mufflers, if you're no longer glowing red, it was doing so because of restrictions. Likely a plugged cat, real common in the original design.

It should run pretty good with the new exhaust, probably a lot less restriction than the old system, even when it was in good shape.

Here's some good info from this site on things you can do to enhance your 2.8's performance, if you haven't seen already:

http://www.4x4wire.com/tech/60degreeV6/

HTH........ed