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Well tierfreund is right, the engine doesnt produce anymore power with a change in the diff, all its doing is changing where in the power the torque is being fed. So with the different gearing, your friend will see a 33ft-lbs increase in torque at a different place in the rev-band but will see a 33ft-lbs decrease somewhere else in the rev-band. a 5hp increase in HP is not statistically significant, its considered normal varience.
All in all, changing the diff is basicly a shift of torque from one place to another. So if you want a car that will get up and jump off the line, then it would be worth it to change the gearing and sacrifice high speed abilities for off the line speed. But if you are someone who needs power up top then shorter gearing would be useless for you.
There is no extra power or "driveline loss" being gained at all.... You just feel like the car is alot faster because its accelerating faster off the line. But try accelerating from 100-->120 and ure car will be a slug. Its all a question of what you want the car to do.
For example, back when the McLarenF1 came out and they ran the car up to 241mph for a top speed record, the wanted to then show the car had a really awesome 0-60 time, well with the long gearing needed to achieve 241mph, it was impossible to get any kind of shattering 0-60 time. So they went and pulled out the diff, changed it for a shorter one and ran it again to get the really low 0-60 time. No extra power is being created by the engine, the diff is just redistributing the torque along the powerband.
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