Seriously great post.The formula for determining sight adjustment/height/etc. is:
Impact Error X Sight Radius/Range = Adjustment Needed
So using your value of .02 as the adjustment already in place, we get:
X (impact error) times 6.5" (your G17's sight radius)/900 (25 yards in inches) = 0.02
When you run the algebra, you should have an impact error of 2.76 inches at 25 yards from an .02 change in sight position.
I use this formula all the time to determine sight heights and amount of adjustment needed to zero irons on a gun, but, there's lots more in play. The first thing is us and our minor inconsistencies that affect shooting performance. Next is the gun, which is not a real decent performer in the precision group department at 25 yards (although the Gen 5s are much better, in my experience). Ammo varies from gun to gun and lot to lot. Light conditions, grip variances and shooting glasses lens grind error (which can be dramatic in some cheaper brands) should also be factored into this. Put all of this together and you can see lots of error.
I would look at adjusting the sights and/or getting a set of Dawsons and work really hard on getting your POA/POI squared away.