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If you apply the same force to a 165mm lever vs a 170mm lever, the longer lever will generate more torque.
Under normal usage the body just increases the rpm's to compensate, so power remains the same (as power is proportional to torque x rpm).
Given that the 165mm is attached to the 170mm crank in this case the RPM must be the same, so the power would be higher for the 170mm crank.
Wouldn't that be factored into the algorithm?