I have a 98 Z71 ext. cab and I get 16-17 mpg in the city and 22-23 mpg on the highway. I have installed a K&N FIPK, high flow MAF sensor, headers, dual exhaust, and a hypertech power programmer, but I only gained roughly 2 mpg city and highway.
I recently purchased a 97 Silverado. The steering acted the same as your's. The previous owner of mine had installed a 3" body lift. In doing so broke a chassis ground that attaches to the cab (Below the heater hoses.) and to the frame (To the right of the starter. There is a engine ground that attaches there also.). After I replaced that ground strap the steering problem was cured. Evidently with out that ground the speed sensitive steering will not work properly.
I've had steering problems twice since the purchase of my truck. Both times it was the EVO sensor. The problem I was having was when in a high speed turn (getting on the freeway) the steering was tight then it became loose in the middle of the turn. I bought the truck new and have had a lot of problems with it (new trans @ 50,000 miles, fuel pump/ sending unit, alternator, EVO sensor twice, air conditioning, electrical problem, belt tensioner, probably a few more that I'm trying to forget about), but so far fixing it beats buying a new one. The EVO sensor and fuel problem seem to very common for this year truck.
1997 Chevrolet Silverado Z71 4wd extended cab, 6ft bed: 4800 lbs curb weight, 15-16 MPG city, 24-25 MPG highway! I know, I have one. It's fast as heck too.
Even though this is much later, and you probably don't even have the 97 any more, the problem that you are having with the steering is the EVO sensor. Just unplug that and it will go to straight power steering. That's what I did with my 97 extended cab Z71 4x4, and it works fine now.