Dan- The portion of the der that the cable is clamped to (the "arm") is engineered to be what it takes to move the pulley cage a certain amount per the grip's click. So, changing its length will upset how far the chain is being moved per click. On a front system with a grip that has only 3 indexing spots (thus 2 clicks...) the shifting will be poor and resulting chain rub will be very annoying
What you describe is common when there's too much friction along the cable's path. I speculate this friction is in the twist grip's interior. When you say you lubed the system did you take the grip apart and apply plastic friendly grease on the sliding surfaces? Checking and or replacing the cables/casings is pretty straight forward but these also want to be free of friction when the cable is under tension (and that's the rub {bad pun} how to test only the cable routing friction without also involving the shifter or the der. It can be done but often is easier with the cable out of the shifter).
I have never liked the twist grip shifting "feature" since Sears had their 3 speed bikes equipped with one. That's a long time
Andy