Exercising diminishing returns.

So person A walks distance C five days a week.  They walk at a brisk pace and burn approx. 500 calories.

Person B starts riding a bike distance D five days a week.  He rides at a decent pace and burns approx. 500 calories.

Person A has developed a certain amount of muscle mass to allow this activity.  

Person B is going to experience muscle change, glycogen stores will increase,  the muscle will respond to the additional work load being called upon.

At some point you get an equilibrium, the muscles are going to maintain instead of build.  So my question is this, do you burn less calories as your muscles become more efficent?  

If you are exercising, in part, to eliminate excess fat from your system, by creating a calorie deficit, are you becomming counter productive?

When I walk to and from work, I keep a steady pace.  There are two hills that I climb on the way home. One that I climb over to work.  I figure these about 70 foot.  Getting to the top became easier at a brisk pace over time.  I was at a point were the only way to increase my speed was to jog.  On a bike, I have considerable more options to increase the speed.  The gears alone increase the load on my legs or decrease.  My mindset is to such that I want to get to work and home in the shortest time possible.  So on a bike I continually try to push myself to be a litte faster, keep in a higher gear etc.