A stage 2 STi should be able to equal your car's potential - mid 12s with a good driver. You found out that this driver wasn't up to the same task. The STi's 6spd requires a lot of shifts compared to other cars. It's so bad that some owners try launching in 2nd just to avoid the first shift. At the track the 1-2 shift happens right near the tree!
The 2-step gives you an instant advantage off the line, especially against someone who may not have that much experience launching AWDs. Just like people in 2wd cars, seeing you get the jump means they start to panic and over-react, causing mistakes.
"Back in the day," nobody ran that kind of fuel upgrades with just a 14b. You're obviously set up now where a turbo upgrade will make a quick and very noticable increase in power. You're so lucky that good turbos for DSMs are also pretty cheap compared to Subarus - plus no rigid "stage X" mods, conditioning that every little mod requires a full ECU tune, the "if it costs more it must be a better part" mentality, and other issues that plague the Subaru modding community.