Great stuff! Sounds like a great move for you.
I went to 165mm on my mtb bike (I’m 5’3″) a few years ago and it’s been such a revelation, it’s something I now won’t ever go back on. No more knee pain (woohoo!) AND I spin better. My husband is about 5’8/9″ and much to his surprise found going to 170s made a noticeable to difference to him too (in the ways you describe and got rid of the slight hip pain he had been experiencing).
The more bikes I’ve had, the more I’ve come to realise it’s more to do with the fit than the bike/components themselves (which, being on the shorter end of the scale has caused some genuine sadness at times!)