...But it is not making your miner from 1t to 1.2t if you follow my thoughts.
When you solo-mine, your miner is not wasting "time", "bandwidth", "processing", sending your wallet or cgminer, the junk-shares. They just grab the next work-load and mine if they find no solution. Yes, it can drag a 1.2THs miner down to 1.0THs of average output. (Prior to the pool).
When you tell your miner to "give me the junk that is ____ diff", so you can submit it as a share... this is what it does...
1: Saves that hash for the diff you wanted (Has to check each result and compare it to your requested value)
2: Checks that hash, to make sure it is valid
3: Sends that hash through the stream (A stream which is shared with other miners sending this crap back also.)
4: Wraps it in a package to send to the pool
5: Sends it through a TCP boradcast, waiting for an "OK, got it".
6: Resends, if that fails... (skip this if it got back an OK, repeat this over and over until OK is gotten.)
7: Works on next load now (repeat from step 1 for next diff)
As opposed to solo-mining...
1: Check found block
2: Submit found block (Repeat from step 1)
Time lost "submitting junk", at the CPU/miner is enough to be noticed. Varies by each chip... depends how fast they puke-out info, and the CPU can direct that info in the threads, and process that info for packing, and sending.
The more "shares" (low diffs) you send, the more you lose in actual processing time. Not to mention the other-end, where you are right... higher diffs = more potential share loss, as they take longer to find. Thus, the need to tune the shares to the speed of the units. And... for 1THs, 128-256 is more "tuned" for less losses of both the processing at the miner and losses from the pool. (Seen more on faster blocks, as those do more "resetting workload", which is where the "workload-size" comes into play.)
I tune machines like crazy. Voltage is step 1, delivery and processing is step 2, cooling is step 3. Beyond that, there is nothing much that can be done. But it all matters, and 1-10% loss from dozens of machines matters a lot more than 1-10% loss from one machine. But I will go over all of that in a full review, once my miner comes.