The 1.6 gallon toilets have tanks that hold a lot more than 1.6 gallons. I just measured my 5 year old American Standard and it holds 3.7 gallons from about 0.5 inch below the overflow to the lower limit of the drain.
I installed an Eljer for a neighbor yesterday and the flush valve closes when the tank is about half empty. If you want a bigger flush, you must hold the lever down longer.
My American Standard came with a little yellow foam float on the flapper chain that kept the float up until the water went down far enough to let the flapper close. I moved the float down as close as possible to the flapper to get more effective flushing.
The big tank half-empty designs have two effects:
1. The higher head gets the water out of the flush tank quicker for a more effective flush.
2. The manufacturers can meet the 1.6 gallon requirement while giving the customers the means to easily get a more effective flush (hence the easily adjustable yellow float).
I suspect that most 1.6 gallon toilet installations use a lot more than 1.6 gallons per flush from from the time you push the lever to the time the tank and bowl are refilled.