You didn't mention changing the air filter... did you try that one?
Usually a bad air filter will sap a good amount of horse from an
otherwise fair engine.

I doubt it's the converter since it did pass inspection, but about two
psi differential would be the max to determine if it was restricting.
Start with a compression check on all cylinders, and if you have to, do
a leak down test on them. Check for any intake manifold air leaks. Did
the old plugs all look good? Check or swap out the coil. Check the
transmission and drive train for any unusual drag. It could be one or
many things on a twenty five year old car. Good luck!

I think an 83 Celica with a 22RE engine would get somewhere around 25 MPG
highway unless you are really easy on the throttle.

Follow PH@Boy's suggestions, and look at the air filter.  If it is black and
sooty, check the exhaust manifold for leaks or cracks.  Take a look at the
exhaust manifold when the car is warmed up in the dark.  If it is glowing
red, check for cracks in the exhaust manifold and try disconnecting the
exhaust pipe from the manifold and see if the engine runs better.  If it
does, there may be a restriction in the exhaust.  I believe that the heat
shield on the exhaust manifold should have louvers - if it is solid, there
may be an updated manifold.

Also check for cracks, holes, or gaps in the black plastic tube between the
air filter housing and throttle body, and check for vacuum leaks.  When you
adjusted timing, does it advance properly when you rev the engine?  If not,
check the timing advance (I don't remember if it has vacuum and mechanical
advance or if it has the wide rotor and electronic spark advance).

On Sun, 13 Jan 2008 19:51:30 -0800, offwhiteghost wrote:

Yeah: take the cat out, take an iron bar, and bust up the internals, and
then replace the cat. If the car runs better, you need a new cat.

But, I didn't tell you to do this, and I would buy a new cat ASAP, cause
if you get caught it can result in jail time.