Cams are an incremental thing. Without more lift, the best you can get from a cam is moving the torque peak around. As it stands they're 9000+rpm motors, the cams that come on the 550's are by no means "mild." (it appears to be the same cam grind on the GS650, and that's a 10,000rpm peak horsepower motor...)
The total cost of a jet kit and pods for a GS550E (which should put you into the low 60's...) is $200. I don't see a camshaft being able to fix the frighteningly bad intake on the GS550.
"just" going from the airbox, to no airbox and pods took my bike from a 110mph to 120mph top speed. You won't see that kind of change with a "mere" cam change. (That being said, once you've got a proper intake on the bike I'm all for swapping cams)
I'm fairly sure the GS550 is a special case. GS1000's have a decent airbox. And you mentioned that the "faster" GS had different carbs. Carbs make all the difference in the world.
Now he IS riding a 78, so he doesn't have the benifit of the 32mm carburators that the 80-82 GS550's get. I've got a motor, a set of VM carbs, and lots of jets so I can see what you can get away with on those. But we won't find that answer untill next summer.
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