More air in, more exhaust out will help with the millage. I would consider a 4'' exhaust very seriously, and you might want to go for a better intake system as well. The KN is not a real popular item here on the site due to the fact that it does not filter as well as some of the others. I prefer the AFE systems myself, but there are several good ones out there, just do a search, and see what different people have to say about them, and make your decision from there.
Gord.