I took my carbon filter out tonight and from the short little test run I did, it seems to idle a little better and has a little more pep way down low, but nothing drastic. There's not even a huge difference in the sound. We'll see what the MPG do over time. For the 5 minutes I put into it, I'd still say worth it.
Well, if you take the carbon filter out, you need not mess with a K&N. The stock paper filter has the same hi-flow rate as the K&N (with none of the oiling problems). This hi-flow paper is necessary due to the carbon filter being there - together they are like an ordinary paper filter on a car with no carbon. You can still do a K&N, but there will be no performance benefit.