Black Mamba,
You have the general idea, if pressure (after compression) exceeds a certain point, predetanation will occur. This is partially because of the pressure, but more because compressing the air causes it to become hotter. Once the heat exceeds the flash point of the fuel/air mixture combustion WILL occur. This is how Diesel engines work. If you compress the inlet tract it will cause the air to become hotter, proportionate to the amount of compression. Two big considerations though - this air has no fuel in it (yet), and it will also be cooled somewhat by the inlet tract, and typically some other mechanism, such as an intercooler or water/**** injection. So the heat added at this stage can be partially compensated, but the heat generated by compressing the air in the cylinder has no opportunity to be cooled, so it cannot exceed some predetermined point without predetonation (usually referred to simply as detonation).
So if you said, as an example, that this point was 200 PSI absolute, (again assuming 100% efficiency), at 10:1 compression ratio, the starting absolute cylinder pressure could not exceed 20psi absolute. Sea level absolute pressure is 14.7 psi, so at 5.3 psi pressurization, you are at the maximum before detonation will start occurring. (I know this is lower than Paxton systems currently run, the numbers are simply illustrative). If the compression ratio was dropped to 8:1, the starting pressure would be 25psi absolute, so the supercharger boost could be 10.3 psi, which would consist of 25% more molecules of fuel and air. The greater amount of fuel would result in more heat & pressure, resulting in more power.
The reason retarding timing sometimes works is because the sparkplug actually fires before the piston has reached the top of its stroke, this is to offset the time it takes for the flame to propogate. As the engine revs higher this advance is increased because there is less time for the flame to propogate before the exhaust valve opens. When you increase pressure (and therefore also heat), the flame will naturally propogate faster anyway, and if it happens too soon, you also have detonation.
An overly rich mixture helps because the evaporating fuel helps to cool the charge, but if the mixture is enriched too much, power suffers, as does drivability.
Another important issue is one of 'hot spots'. If the cylinder has some point that becomes hotter, it will become the trigger to start the detonation process. A typical source of this 'hot spot' is the sparkplug tip. This is why people use 'colder' plugs. Spark plugs need to clean themselves or they become 'fouled' and a plug that is too cold will foul, resulting in misfire, but if it is too hot, it will become the trigger of detonation.
Hopefully this has shed more light than confusion.
Mike Dolan