"The relationship between carbon monoxide output vs. burner clearance is an interesting one. Generally, more clearance means less carbon monoxide, but not always. As Roger points out, a wider burner head is easier to get the oxygen mix right giving less carbon monoxide."
Well, generally, CO is generated from reburning CO2. Either because there is too much fuel in the mixture (or not enough air, same thing really) with you refer to or because there are unacceptably high CO2 levels being reburned, ie, not enough circulation of CO2 out of the heated zone of combustion.
In your picture, you can easily see the perfect flame with three distinctly different zones of heat within each flame. The first is fairly well mixed, but uncombusted fuel/air. The second is the hottest part and the bright blue, nearly white flame there also indicates where the hottest portion of the flame is. Leftover combustion occurs later in the flame and is broader and bluer, giving the flame its charateristic color as energey(heat) disipates. Once you mix and burn all this, the distance to the pot may allow CO2, a normal byproduct, to be reburned producing CO. Wider is not always better if you also trap and reburn the CO2. According to your picture, the pot should be lowered a bit for best heating. The flame has already started cooling by the time it interacts with the pot bottom. At the same time it is producing a minimum of CO because the circulation is good. Not so much that you need additional oxygen to insure clean burning. Rather the CO2 is flushed away before it can be reburned. Fuel/air mix should be controlled more by the jet and air intake, if I remember a seventh grade science lab correctly.
I have said before that the intake vents, usually just holes, should be adjustable to maximize heat at altitude and valve setting. Generally, this is ignored, though, because at best, it will only save 2-4% on fuel...barely noticable. But, if incorrectly adjusted, could cost as much as 10-15%, maybe more if badly out of whack...