Ground effect is usually considered to start at around 10 chord widths. It really has more to do with chord than with wingspan.
As for the engine, you are confusing raw fuel burn with fuel efficiency. Yes, piston engines burn less fuel at altitude because of lower air density, but they also produce less horsepower. Efficiency is determined by how much horsepower you can produce for a given quantity of fuel. Turbocharged engines are often more efficient than normally aspirated engines, yet they do the opposite - they compress the air to increase the density of the fuel/air mixture, thus making more power.
Typically, an engine will have a power setting where it burns fuel at the optimum rate. Any altitude you fly at with that power setting will give you the roughly the same fuel burn, if you lean properly.
The reason high-altitude flight in a small aircraft is more efficient has more to do with lowering drag on the aircraft. It needs less HP to maintain the same speed, or can fly faster for the same amount of horsepower.
However, there are counterbalancing effects - the propellor, which is a flying collection of design tradeoffs, will be less efficient at high altitudes. If you fly slower, the induced drag on the wing increases. At some point, the wing just won’t be producing lift efficiently (or not at all - it’ll reach its stalling AOA just trying to maintain level flight).
The main problem in choosing an optimum altitude for an airplane is wing design. Long, thin wings work best at high altitudes, because they have the lowest amount of induced drag. But down low they are a pain, because they make the airplane harder to manoever on the ground, they take up more hangar space, and the increased bending loads of long wings require stronger, heavier spars and spar attachments.
Fat, relatively stubby wings (like the original Hershey Bar wing on the early Piper singles) work great in ground effect and at low altitudes, but the induced drag curve goes up sharply at lower indicated air speeds (at high altitudes, your true airspeed may stay the same as it was down low (or even be higher), but your indicated airspeed will be quite a bit lower).
Similarly, long, thin propellors work best at high altitudes, but ground clearance problems means that designers will have to make shorter, fatter propellors that lose efficiency in thin air. Also, if the propellor is fixed-pitch, it will be much less efficient in thin air. Fixed-pitch props have to be designed to give good takeoff performance, and that means a fine pitch that doesn’t work well at all at high altitudes where you want to grab huge gulps of the thin air to move you forward.
An aircraft designer will consider all of these effects, and come up with a compromise that best fits the ‘typical’ mission of the aircraft.
I seem to recall the chord on a Comanche is around 4 feet. If that’s the case, then Max Conrad was probably getting some ground effect efficiency flying at 30 feet. I can’t say whether or not he would have been better off flying higher without knowing all the details.
One other reason he might have flown low - winds. If he was flying into a headwind, he’d almost certainly have been better off flying low. However, the difference in wind velocity between say, 30 feet and 150 feet is almost nil, so I have to assume he felt he was getting a ground effect boost flying where he did.
