Chopped handle bars?

I've read that wider bars open up your chest more, increase the volume of air you can breathe in and hence improve performance, but I haven't seen any solid evidence to support it. On the other hand, wider bars result in more wind resistance.

That was the theory the (road)cycling world believed up until about the summer of '89 which is -as you may remember- when Greg Lemond beat Laurent Fignon in the tour by being the first one ever to use aero bars during a time trial in the road racing circuit (they may have been around in the triathlon circuit). Up until that moment, some riders would actually have wider bars during time trials because as you said it was believed that allowed for better inhalation. But as you also state, it now became quite clear that the adverse effect of the increased wind resistance was greater than the advantage of better inhalation.

Apparently, Greg Lemond's team kind of tricked the UCI into allowing the aero bars saying he was using it for medical reasons (position) instead of telling them it would give Lemond a big aerodynamic advantage over the other riders because they were afraid the UCI might not allow them to be used if they knew the real reason.
Of course it is quite typical that the UCI didn't have a clue about the advantages a new piece of equipment might give riders as usually the UCI is somewhat clueless about cycling. ;)