The stock timing setting is usually a bit of a compramise really, for diveability, power, idle etc as the average joe doesnt wanna have a crap low end just to have a few extra hp in the high top end.
upto a point you can mod the factory settings for that bit more power on a fully stock engine, but if you go too far you too begin to comprimise things (e.g scarificing low end driveability of more top end power).
but as soon as you go modifying things like compression, cam, carb you have to change settings accordingly.
Yep a shaved head will increase comp. not sure how much more advance would be nessacery as it depend on how much you get it shaved and what the final compression ratio is.
Also a change of fuel, say from regular ULP to premium. you can give it a bit more advance to take advantage of the extra octane.
My ute is tuned for about 95-98 octane but due to the expensive petty price and fuel consumption i was running regular (91) and you could tell it wasnt tuned for it because as soon as you opened the secondaries it would ping a little bit.