I'm probably NOT the best person to ask about some of this, but I'll take a stab and then sit aside to let others give their opinions, too.
First, I have a good friend from Fall River, MA, (Bob DiCorpo) who owns an original '56 Speedster. He pays others to take very good care of his car mechanically, and I believe it to be stock and "up to snuff" in all ways. I've parked next to his a number of times and often noticed that Pearl sits lower than his car, when measured at the door sill and the top of the door. I've got Pearl about as low as I care to take her, because any lower and the rear wheels will rub on the inside of the body going over bumps.
I've also noticed that other original Speedsters, besides ALWAYS being much quieter than our cars are also sitting a tad higher. The "wheel well lip covering the tire" thing could well be that their bodies have a lower wheel well top lip than ours do (especially the flared replicas that have round rear wheel wells, not flattened tops like the classics). I don't know about this, just offering it for thought.
"Why are the rear torsion bars adjustable in the first place?"
Because they come from Volkswagen pans that were used for sedans, Things and buses. They could be set to different heights as needed but the same torsion bars could be used. Nice cost savings. Also, as the car aged and sagged in the rear, they could easily be brought back to spec when the rear spring plate bushings were replaced by using different spline combinations.
Bear in mind, too, that raising or lowering the car (at least early VW's bugs) does not affect the spring rate. All it does is raise or lower the car.
"I'm pretty convinced at this point that my current set up (adjustable front beam and IRS) has it's limits and if I want my car to handle like a "sports car" it's time for a completely custom A arm suspenion chassis requiring a frame off "hoopty-iation"
Perhaps, but what is your definition of "handle like a Sports Car"? Compared to an original 356A, many replicas can out-handle the original. Compared to a Miata, they come up lacking, especially their unique ability to make the rear come around to the front!
Then there are massive handling differences between a classic, stock tired, 5.5" wide wheeled, swing arm Speedster and a flared, 7" wide wheeled, anti-sway-barred, wide-tired, IRS, slammed Speedster, both having a pan frame. Will the latter handle like a Miata? Probably better (mine handles better than a Cobra in corners). Will it handle like a Go-Kart? Nope. Will it out handle the former Speedster Replica or an original 356A? Absolutely.
"Right now what I'm looking for is a smooth riding car that allows me to enjoy a bit of "pushing it" when the mood strikes me.
What is the recommended setting for the rear torsion bars with stock shocks on our cars?"
At whatever ride height you prefer.
"Wouldn't it be better to set the torsion bars to where they're supposed to be (original VW setting) and then adjust with the spring plates? I saw a set of lowered spring plates on the Red 9 Design site (they come in 1", 1.5", 2"), what affect would those have on the quality of the ride versus ride height?"