** EDITED **
Well couldn't sleep, spent the night with my mind being 'a fly on the venturi wall' trying to understand my carb.
So, even with a closed twist-grip (there is still a tiny air-gap under the slide), the contributing circuits to fueling the engine are; 'pilot circuit' (pilot jet & air screw) and needle straight section in the needle jet. Yes I know all the charts say that it is only the pilot circuit but in this case I feel it is both circuits.
At Idle speeds with a closed throttle grip, the major contributing circuit is the pilot circuit, due to minimal 'concentrated' airflow over the needle jet to pull the same amounts as the pilot circuit can supply. At a certain point the vacuum pulse over the pilot outlet becomes less and air-speed picks-up over the needle-jet then making the needle the major contributing fuel supplier.
With the two circuits supplying fuel at idle, this is like having a choke passage open, now realizing why I don't need choke to start the bike cold, even with dropping from a 68 to a 50 pilot jet. Having dropped that far in pilot jet makes me think that the little less fuel supply at further throttle openings might require stepping-up the main just a touch, might jump up from the 160 to a 165 (168 is stock).
With a closed twist-grip, the needle is on the straight section at the needle-jet, and stays on the straight section for the first 10mm of throttle slide movement (to about 1/4 throttle in a 38mm venturi). There is no denying that with a fresh 500cc cylinder, the intake vacuum at a closed throttle IS still enough to pull fuel from the needle-jet. Whether this is just a design fault with the Keihin PE38 I don't know, but I will say that I swear the same thing is happening with the VM38 Mikuni on the KX400 (carb is off a KX250A5).
For a bit I thought that because I have the bike set so it would idle, that the slightly lifted slide might bring the needle-jet into play at a closed twist-grip (and I guess it does) but then I realized that with any amount of slide lift, the depression over the needle jet will draw fuel fuel past the needle, so with the same given intake vacuum from the 500cc piston, and, the fact that the straight section of the needle will still 'allow' fuel to flow out, fuel HAS to flow out if the slide lets any air past.
I guess the next step is to try (even though I don't want to disturb something's that now working ;-) ) letting the slide drop to completely to the bottom to see if I can stop fuel supply from the needle-jet with a closed twist-grip?
To keep the status-quo in the fuel curve, it makes sense now that running a smaller (richer) straight section needle required a drop in pilot jet size, it just took me a while to juggle the correct ratio to balance closed throttle & 1/8th throttle, as both circuits are contributing, varied amounts at various openings.
I now wonder how many other open-class two-strokes have this issue, with the them having such strong intake vacuum at closed throttle?
** EDIT ..... I just realized since I made this post that I have been confusing 'closed throttle' (slide all the way to the bottom of the carb) with 'closed twist-grip', because the high idle rpm setting meaning the slide is open (yes on the needle!).