The extra weight will not add power but I do not doubt when you say the dyno shows the engine producing more power and revving higher.
The extra weight may be allowing the engine to reach higher rpm and/or altering the point/s in the rev range where resonance occurs but there is always a trade off.
You can not "fix" engine balance, all you can do is alter the out of balance points to a range that suits the characteristics of the engine.
You mean the extra weight will only shift the natural frequency?
I thought the weight is for dynamic balancing.