BEFORE TAKEOFF, THE PLT RECEIVED A WX BRIEFING & A LOCAL AUTOMATED WX OBSERVATION THAT REPORTED STANDING LENTICULAR CLOUDS & 9100' DENSITY ALTITUDE. HE TOOK OFF ON RWY 27, WHICH SLOPED UPWARD & WAS SURROUNDED BY MOUNTAINOUS TERRAIN. THE WIND WAS REPORTEDLY FROM 270 DEG AT 4 GUSTING 18 KTS & THE ACFT WAS LOADED AT/NEAR ITS MAXIMUM TAKEOFF WT. THE PLT SAID THAT FOR TAKEOFF, THE MIXTURE WAS SET FOR 'HIGHEST RPM AND PEAK EGT,' BUT THE FLT MANUAL RECOMMENDED THE MIXTURE BE LEANED ACCORDING TO THE MAXIMUM POWER FUEL FLOW PLACARD. AFTER LIFT-OFF, THE PLT HAD DIFFICULTY ESTABLISHING A CLIMB. HE SAID THE ACFT WOULD NOT CLIMB AFTER REACHING 500' AGL & BEGAN LOSING ALTITUDE. A PASSENGER SAID THE PLT CIRCLED & TRIED TO GAIN ALTITUDE, BUT ENCOUNTERED A DOWNDRAFT. REPORTEDLY, THE STALL WARNING HORN SOUNDED ALMOST CON- TINUOUSLY. THE PLT SAID HE TURNED BACK TOWARD THE AIRPORT, BUT THE DESCENT INCREASED. SUBSEQUENTLY, HE LANDED SHORT OF RWY 27 & THE ACFT HIT DITCHES DURING THE LANDING ROLL. THE ENG WAS NOT DAMAGED & WAS RETURNED TO SVC WITHOUT REPAIR.