Greencannon,
The purpose of the billet extended clutch arm was to lengthen the arm by 10mm so that there is more leverage when pulling the clutch in. It's a pinch bolt type set up but for some reason Team Green found that 10mm was optimal. I'm almost positive that it's not adjustable, it's a solid billet piece with a slit in it. I inquired about getting one of these from Team Green (there only a few miles from my house) when I bought one of their 2004 KX500s. I had no luck, but I think Destry's bike was the only one set up with this that I saw. Mine was was missing the infamous removable clutch cover and this billet clutch arm. The bike I have is the same set up as Destry's shown in the picture with the engine done by Varner, suspension by ACME.
With respect to the needle, Polar-Bus is right on target, optimum power wasn't the top priority for the Team Green KX500s. They had to be extremely reliable to win so many titles. These bikes were mildly ported, always had fresh reeds (I was told they ran stock reeds and they replaced them often), new plugs, fresh top ends, etc. Not much more needs to be done if you can hold a KX500 wide open for a prolonged period of time.