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As most people know at this point, ARP standard head washers for the Z32 were smaller than stock head washers and people were installing those before people knew the washers were too small.
At pump fuel power levels the small washers did not cause problems and I am sure there are a lot of those still in running cars.
With E85 being more widely used, where the boost and timing can be significantly increased without knock, these small washers will not support the cylinder pressure of the increased power.
As you increase power in an engine, you increase cylinder pressure, basically more power is more pressure forcing the piston down, the same pressure pushing down on the piston is pushing back against the head.
Holding the heads down running full tilt power on E85 requires full contact of at least the stock size head washers, larger than stock washers are preferred and become a requirement as the power gets greater with large turbos running E85.
The standard small ARP head washers do not support enough area to hold the heads down with the power you can make on E85, the heads will distort and cause head gasket failure.
What happens is the heads lifts against the small washer and the pressure causes the washer to sink into the head.
If you have ever run the small washers, especially when you have had a head gasket failure, make sure you inspect the head washer area of the heads for damage.
If the head is sunken in where the small washer was, this must be machined level again. Installing a large washer over the a sunken smaller washer damage will not support enough area to hold the head down (similar to running the smaller washer). The larger washer when used on a damaged head will only support the area between the small and large washer size, also the washer will deform due to the lack of head material under the nut from the sunken washer area.In Short: Running standard size small ARP head washers, or running large washers on heads that have damage from small washers, will cause head gasket failure running E85 power. Here is the damage that occurs to head running the small ARP head washers with high power. 
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PSA RE: Head Washer Size / Head gasket Failure - 
