Does the crankshaft slow down due to the drag induced by the propeller's pitch? I got really lost in that explanation. 
Yes that's basically correct. The drag produced by the prop blade moving through the air creates a force that opposes the rotation of the propeller (actually it's a bit more complicated than this but we'll just keep it simple for understanding). Again, don’t confuse this drag with the drag of the airplane. For our discussion they aren’t really related. That’s why we refer to this usually either as torque or prop-load to avoid confusion.
Additionally, if we're aiming for such high performance and more thrust, wouldn't it be smarter to pitch the blade more to attain the performance? It bites more air after all. Unless of course my drag theory is correct in which the drag of the props simply cannot allow the prop to spin fast enough to create as much thrust as possible.
Let me see if I can explain this without getting too convoluted. From blade element theory the relationship for thrust is:
T = L cos (b) - D sin (b)
where
L = prop blade lift
D = prop blade drag
b = prop downwash angle
Just like a wing when we vary lift, drag also varies. Sure we could increase the blade pitch to increase prop blade lift but prop blade drag increases as well. There's an optimum where the difference between blade lift and drag are maximum. This is where max thrust is produced. Outside of that we get diminishing returns for increasing lift or decreasing drag.
Another more classical way of describing this is with this relationship:
Thrust = prop efficiency * engine BHP / velocity
Engine BHP varies directly with engine RPM. So if you increase the bite of the prop blade so that you increase prop-load which results in a decrease in RPM you get decreased thrust. Of course prop efficiency also varies with propeller thrust (Ct) and power (Cp) coefficients as well so it gets even more tricky since prop efficiency is maximized where prop Ct/Cp are at maximum.
Tango, XO
412th FS Braunco Mustangs
