Although it has a higher octane number, that is not quite the end of the story.

A lower octane fuel is actually more explosive and has more energy, but tends to be more unpredictable when the A/F ratio is changed. The ECU is not quick enough to respond to compensate and knocking occurs, therefore a 'safe' tune is generally used and less engine power is produced.

When the octane number is higher, the fuel burns more predictable and smoother, but with less energy. The benefit for the engine though is the tune can be more agressive (i.e. closer to the lean limits) without the risk of knocking, hence more engine power is achieved.

On to LPG vs Petrol, you are right that in certain scenarios LPG performs better. I've heard that LPG will actually perform better in the lower RPM region and I have a feeling it is due to its better vaporisation in the engine, hence better air/fuel mixing when the engine is a bit asthmatic. Petrol performs better in the higher RPM due to its higher energy content and is being vaporised more efficiently.

My mate has a fiat 124 with a lancia delta integrale head, some other fiat 2L bottom end and the turbo off the nissan RB25 @ 12psi. It actually runs on LPG and the above seems to hold true. It is real gutsy down low but flattens out significantly in the high revs. He is still working on getting the petrol working, but it will be interesting to compare.

On another note the prius forum is just plain funny!