I used a local jeep shop to install bilstein 5100 adjustable shocks in the front to level the front. I noticed about a 2 mpg drop after they installed it. BUT I noticed a much bigger change in my lower end torque.

I have considerablely less lower end torque for city driving. I didn't change out wheels or tires, just adjustable ride shocks. I did end up putting on 34s on, a couple months later but I didn't notice much of a change in torque with the bigger tires, only a drop in MPG(about 5-6 mpg less).

Has anyone else had this issue? Is this normal or do I need to have my truck checked out?

 

You said you didn't change out wheels or tires, but the next sentence you said you out on 34"s. when you put the 34"s on, the truck will react as if you put a higher gear in your truck. So, not only will the taller tire throw off you're speedo and mpg calculations(assuming you didn't recalibrate it), but the heavier tires will cause you to loose mpg. Also, since you're running taller tires, it's going to shift at different times, creating the effect you're low on power

 

Timeline:
February- installed levelling kit
May- installed new tires

I went with the the same wheels and tires before and after the levelling kit for several months. I noticed the difference in torque with the same tires for several months. THEN I changed out the tires later

 

That's really odd. I did a level and stayed with the stock rims and tires for about a year before getting new rims and bigger tires. Saw zero change in MPG's or power with just the level. Took about a 1mpg hit with the new tires.

 

Impossible... adjustable struts can not effect torque or power.. you have something else going on..