Mike J,
Head clearance is the distance between the face of the piston at TDC and the squish area of the head. Placing a head shim in between the head and the sleeve (liner) will increase the head clearance. Decreasing the head clearance will raise the trapped compression ratio which will improve the performance, However too much compression and you will detonate. This is bad! The glow plugs will fail in most cases of excessive compression and maybe this is what you were talking about with looking at the plug after a run. You can read your plug after a run to get an idea on mixture as well.
If you need to know more, please post what type of engine and what mod's are done (if any) and I'll try to point you in the right direction.
Tim.
