"Do K&N filters work? "
They filter the air, so yes, they work. Whether they can offer a significant increase in power or torque with no other changes to the car seems a bit unlikely. After all, the absolute MAP in a normal production car at full power is at least 97% of atmospheric, so it seems that the maximum gain could be 3%, at full power, and rather less elsewhere. Frankly I doubt you'd see anything in practice, since at max torque your airflow is down quite a bit, and the pressure loss will vary with airflow^2
" Being a computer nerd, how about those computer chips you can purchase?"
Yes they could increase power and torque and mileage. Tuning the chips is a balance between many requirements, and an aftermarket tuner can have different priorities to the OEM guy. After all, he doesn't have to worry about variability, reliability, emissions, or drivability.
"Bigger straight dual exhausts?" Well, if you keep your cat then the maximum improvement seen in the back pressure thread was about 2-3% on max torque and power, and it would give no measurable effect on the standard fuel consumption tests or emissions.
Cheers
Greg Locock