What size is the piping from the "Y" pipe on back to the exhaust tip? If it's truly 3 in. all the way back (with no size reductions along the way) on a 3.7 I'll guarantee you're losing power. Even before I did the header back system on my 5.7, the diameter of the stock exhaust log collector was 1 7/8 in. and the necks of the "Y" pipe (where it connected to the log) were about the same size, but the rest of the "Y" pipe was 3 in. Everything else, IIRC, was 2 3/4 in. Now everything from the header collector to the tailpipe tip is all 3 in. A few of the biggest issues with running too large a pipe is that you won't get adequate scavenging and flow velocity through the system, and your throttle response may also suffer. All of this will adversely affect the overall volumetric efficiency of the engine. Pipe size also should be chosen depending on where you want the power gains to occur.....low end, mid-range, or top end. There is a "sweet spot" pipe size that will give you the best of all three, but not optimal for any of them.
So, there is a lot involved in selecting a performance exhaust for a given vehicle. It can be said best by this quote from an outfit knowledgeable in exhaust tuning:
"The main purpose of an exhaust system is undoubtedly to route the spent exhaust gas out of the car's engine. Along the way the exhaust gasses may be used to drive a turbocharger and now-a-days it will most definitely incorporate a catalyst converter to reduce carbon dioxide emissions. But on a high performance car, such as a modified street car, or a modified race car, the performance exhaust system is much more important as it has a direct affect on engine performance and engine power. As a result, the exhaust system, and particularly the exhaust header design, plays an important part in both engine tuning and car tuning.
In general terms, an exhaust system consists of an exhaust manifold (which is sometimes called an exhaust header), a front pipe, a catalyst converter, a main muffler or silencer, and a tail pipe with an exhaust tip. In terms of tuning the exhaust system, the muffler is the easiest to deal with it's simply a matter of replacing the stock muffler with a free-flow or high performance muffler, such as a Flowmaster muffler. The result is a free flow exhaust system. However, the performance muffler must have an inlet and an outlet pipe that is the same size (diameter) as your front pipe and your tail pipe. Your front pipe and your tail pipe should also have the same diameter. The rest of the exhaust system is much more complicated as you need consider exhaust back pressure, your engine's power band, and your engine's maximum usable RPM.
The amount of back pressure produced by the performance exhaust system is crucial, as too much back pressure will have a negative effect on your engine's top-end performance because it will restrict the flow rate of the exhaust gasses at high RPM. The result would be the engine not being able to expel the spent exhaust gasses fast enough to prevent spent exhaust gasses from contaminating the fresh air/fuel mixture that is drawn into the engine on the next intake stroke. Ultimately, this will result in reduced engine power! Therefore, attaching a little 1-inch pea-shooter to your engine instead of an performance exhaust system is not such a good idea! But then neither is fitting a 10-inch sewage pipe. If the exhaust pipe is too large, you will get reduced flow velocity of the exhaust gasses. The flow velocity of the exhaust gasses assists with the scavenging of the spent exhaust gasses as well as the amount of air/fuel mixture that can be drawn into the combustion chamber on the next intake stroke. This is because the flow velocity of the exhaust creates a low pressure immediately behind it that sucks more gasses out of the combustion chamber. The trick is thus to get the exhaust back pressure just right."
Hope this helps explain it a little.