Yes, it does increase compression. But, it changes the "ignition timing" of the engine. Adding compression will ignite the air/fuel mix earlier, usually increasing low end torque, and midrange power. It can also put you right on the edge of detonation.
DO NOT remove head gasket shims if you plan on running fuel with more than a 20% Nitro content.
Its common to start burning glow plugs due to detonation. If you increase the compression, and the engine shows a dramatic increase in power, but starts burning glow plugs, you can try a colder plug. Colder plugs "retard" the ignition timing, amd will sometimes keep a hot engine with lots of compression from detonating. However, cold plugs tend to be finicky about your tune up. A cold plug will want a leaner air fuel ratio to make power.
You run the risk of melting the coil in the glow plug, and having it fall down in the cyll. If you get parts of the coil stuck between the piston and sleeve as it trys to escape out the exhaust port, it can ruin the piston and sleeve.
If you decide to try it, listen for the engine to "pop" at high rpm. If it pops, you are on the verge of melting the glow plug. If you continue to run it that way, letting it pop at high rpm, the glow plug coil will melt, and the engine will either shut off completely, or will act like its running overly rich all of a sudden.
Thats your cue to shut it off and check the plug.
btw- Those engines dont make any power because the crank is designed with a junk intake port. You'll find alot more power in porting the crank, than you will anything else on that particular engine.
