I have read that residue other wise known as engine gunk can accumalate on top of the pistons causing higher compression ratio. Is this remotely possible? If it is, would this cause a higher power output? Not that it would be good of course.

 

Theoretically, it does increase your compression since it takes up volume in the cylinder. But the buildup you're talking about is so small, so the increase is negligible. Besides - excessive buildup can result in hotspots that can cause predetonation (dieseling or knocking), which can be harmful to your engine.