I use the settings specified in the manual with CEM and temperature effects enabled. I can exceed the RPM limit briefly with no problems as long as i keep temps in the normal range.
Generally speaking, manifold pressure is a measure of the pressure within the engine manifold intake where the fuel and air get mixed, just before they are fed to the cylinders for ignition. At least this is how it's measured in engines using a carburetor, i'm not sure where it's measured in the 109's injection system, but the general idea is the same. It might sound funny, but what it does is show you how hard your engine sucks at any given time
If the intake is full open it's sucking the maximum amount of air, you get higher manifold pressure values on the instruments and more air means more fuel/air mixture to burn which translates to more power. It's what your throttle lever does, controlling that gate/valve in the intake to restrict or allow airflow to the engine.
So, with the throttle at idle your MP gauge will actually read less than the outside air pressure because the engine is starved for air, but with the throttle at full it will show the exact outside pressure. If you have a supercharged engine like the fighters in CoD have, it will even show more than the ambient pressure because the supercharger compresses the air even further before feeding it to the engine.
Depending on the aircraft you fly, it's measured in different ways. German aircraft measure it in atmosphere/bar units and that's what your Ata gauge reads, 1 Ata is actually the air pressure at sea level on an average day.
Since the 109 is fitted with a supercharger, you can go higher than that to 1.3-1.4 Ata. As you climb higher, the air outside is thinner so it gives less pressure, but thanks to the supercharger you can have sea level performance of 1 Ata pressure at 3-4 km of altitude (approximately, don't remember at what altitude exactly it starts to drop off). Going even higher, even the supercharger can't keep up with how thin the air is so you will notice it dropping below 1 Ata at some point.
This is the fundamental difference between real aircraft (which CoD now models accurately) and how we used to do things in the previous IL2 sims: full power is not always full throttle. Power is a combination of throttle and RPM, even mixture if we want to go really complex on the matter.
In fact, there are WWII fighters where going full throttle while on the ground or at low altitude could destroy the engine in a couple of minutes, because full throttle at low altitude can exceed the engine's maximum rated power. They were built to generate a lot of "reserve pressure" to compensate during high altitude flight, but if that reserve was added to an already high-pressure starting point (when low, with a high ambient pressure) it could blow the engine to bits.
Full power is the amount of pressure the engine can tolerate at a certain RPM value that generates the maximum horsepower. For the 109 it's around 1.4 Ata (i think). When on the ground, you can easily achieve 1 Ata with the throttle pushed mid-way, when flying at 6km of altitude you will be hard pressed to achieve the same value with the throttle wide open due to the drop in the outside pressure: the engine can only work with what its given-->the air it sucks from outside the plane.
Also, if climbing/diving you can see the Ata value decrease/increase without even moving your throttle: it's the outside air changing in pressure that affects the amount of pressure in the engine induction system.
Finally, reducing prop pitch too much has the effect of transferring resistance from the blades to the engine and this increases the pressure. That's only a rough and by no means accurate description of the effect, just be wary that reducing RPMs too much while on high throttle settings might push your Ata over the limit.
So, with all that out of the way, let's see some usable values.
For climb and combat i usually set the throttle for 1.3-1.35 Ata, which is what the manual specifies. If i don't make any drastic altitude changes during the fight it tends to stay relatively steady, so i spend most of my time baby-sitting the RPMs.
This is quite hard to control in precision, so i just focus on maintaining the 2500 RPM redline limit. According to the manual, the actual never exceed RPM during dives is 3000 RPM so you have some wiggle room. I have used 2700 RPM on occasion, either by mistake or to get some extra "pull" from the prop during combat and the engine didn't die on me. It's doing fine as long as you don't leave it there but bring it back to 2500 RPM within 5-10 seconds.
I have not experimented with the oil cooler too much, but i can safely run combat power settings (1.3 Ata and 2300-2700 RPM) with the oil cooler about 3/4 open. Maybe it's possible to make do with closing it a bit and gaining some extra airspeed but i haven't tested it yet.
The one that's hard to get right in the 109 is the water cooler. Water seems to heat up and also cool down faster than oil, so power changes have a much more immediate effect. I might suddenly need to increase power and risk having it overheat, or i might chop throttle during the dive and have it cool down too much. As a matter of fact, i always give it 2-3 keypresses of the "close water rad" command before going in a protracted dive and increasing it afterwards.
This is made a bit harder by the way we get feedback from the control. While it's easy to judge the position of most controls by looking at the cockpit levers or the overlay panel, the water cooler cockpit control is a rotating crank whose position is hard to judge (it turns more than a full circle so you can't just look at it and know its position) and the info window with the engine controls doesn't display actual position either. It just displays if it's in motion: up when you are pressing the open key, down when you're pressing the close key and center when you are not messing with it.
Due to these reasons, for the most part i run with the water coolers almost all the way open during combat. In the 110's info window the water cooler is depicted similar to the other controls (the slider shows actual position) so it's easier to set precisely and gain some extra speed.
I'm sure that if they changed the info window display on the 109 to be like the 110 i could manage the water coolers better and maybe gain some extra airspeed. Currently, keeping the RPM at the right place (within limits but not too low to deliver useful power) is already taking up most of my attention so that i can't afford the guesswork involved with the water cooler's position and i just leave them fully open.
For example, when diving i reduce prop pitch a couple of clicks, increasing it again during the pull out, but both the blade angle (visible on the clock-like instrument) and the RPM still take some time to adjust, so you actually need to be thinking ahead and applying changes before the start of your maneuver.
I spent 15 minutes chasing an AI hurricane in a climbing scissors fight yesterday, gaining on him and then having me overtake me, until i realised that i was making a mistake with my prop management. As soon as i started paying more attention to maintaining as close to 2500 RPM as possible, i was able to easily close up on him and shoot him down.
Sorry for the marathon post, this sim has so much depth at high realism settings that describing a simple boom and zoom bounce takes 2-3 paragraphs to explain what controls to use, how and why