Sounds like you have the 'X' model. Supermoto from factory, same as the RE but different spring rates and a bigger front disk.
Tyre wise I'd stick with stock sizes, going bigger on the rear will make the handling worse.
As for the power, have you checked and tried the simple things? Air filter, fresh plug for a start. Then you need to look at power valve adjustments, exhaust leaks etc. If it pulls at 8k but not at 7 then you could potentially have a carb issue, you could try setting that back to standard if you think the jets haven't been tampered with