My 550 just has a lever on the carbs, so I can't say for sure. But just to reiterate, when I say open, I mean it's not engaged and not pulling any more fuel than normal, and this is how it should be operating when warm. Closed is engaged and will force more fuel through the carbs, and is also not meant for normal riding. Might explain your poor mileage.
I'd say off the top of my head you've been riding around with it engaged all the time, which will make it feel gutless over a certain RPM, as well as foul the plugs. Maybe someone with that type choke mechanism can comment. If it is the case, I'd take your plugs out, clean them real well, set your valves, then check the ignition settings.