Just a guess.
If I were to guess, 'cause I'm not too smart, I'd say that increasing timing will increase cylinder pressures because the ignition of the fuel air mix will happen sooner. This will allow more fuel to burn earlier than would normally happen. The more fuel that burns, the more the expansion of the gasses in the cylinder. Therefore resulting in higher cylinder pressures (remember, too much is bad).
Think of it this way. Normally, you would peak cylinder pressure at around 20 degrees ATDC (I dont' know what it is actually). And your timing is at 11. 5 BTDC. You advance the timing to 16 BTDC. That would shift your peak cylinder pressure to approx. 13. 5 ATDC. The volume of the cylinder at 20 ATDC is larger than it would be at 13. 5 ATDC, but you have the same amount of fuel burning. That means, your pressure would be higher for the amount of volume in the cylinder. Clear as mud?
The lowering of the EGT's happens because you are allowing the fuel to burn longer in the cylinder (where you want it to burn) and allowing for more complete combustion. The combustion of fuel will start earlier in the rotation cycle of the engine allowing for longer time to burn before the exhaust valve opens. One of the largest contributors to EGT's is unburned fuel. This is also why you will get lower hydro-carbons in your emissions when you advance the timing. The fuel (hydro-carbon) has burned longer and less unburned fuel is being pushed out. The longer burning cycle also results in more NOx emissions. NOx is a by-product of diesel combustion. More of it means higher efficiency, but it is also one of those pollutants that isn't very good (Acid Rain).
Of course, this is just a guess.