noob needs help with mileage - only 10 MPG!

If the lash is too loose ("backed off", as you say) then it can force cylinder pressure past the rings. Probably not 30%, and that's probably not what's going on here since it doesn't cause rough hot idle or very poor MPG.

But if the lash is too tight, the valve will be held open and cylinder pressure will sail right through the not-fully-closed valve, which will show up as high leakdown numbers (and rough hot idle, and poor MPG). If we knew where the leakdown was escaping (out the intake, out the exhaust, through the crankcase) we'd have a clearer idea of what's going on. But valve seat recession can certainly cause the valve lash to tighten up.

The owner of this car needs to pop off the valve cover and spend half an hour's quality time with a couple feeler gauges and a wrench.