Setting proper timing goes hand in hand with setting proper fueling. But timing can affect the observed O2 readings. More advance tends to show up as a richer engine while less advance shows up as a lean engine. This can be more pronounced on engines with a larger cam. The exhaust valve opens while combustion is still occurring so more advance means more O2 is reacted before the exhaust pulse passes the O2 sensor. One very good method I've found to attain best timing is to use an oil temperature gauge. As timing approaches best power you'll find a small range of settings that don't seem to make a difference in the seat of the pants dyno or in the O2 readings. But if the timing is slightly over advanced, then combustion pressure will fight against piston motion without causing knock. The wasted energy has to go somewhere, and the very first place it ends up is in the oil film between the rods and crank. Over advanced timing will cause oil temp to rise. Back off timing a degree or two and see if the temp stops increasing. It may not decrease unless you have an oil cooler, but at least it will level out and stop rising when timing is good.