THE PLT HAD STABILIZED ACFT IN A 125' HOVER, PRIOR TO PICKING UP A LOAD, WHEN THE ENG SPOOLED DOWN AND ACFT ENTERED TALLTREES WITH LOW ROTOR RPM AND PITCHED NOSE DOWN AS IT DESCENDED THRU THE TREES. GROUND WITNESSES HEARD 2 LOUD 'BANGS' PRIOR TO THE ACFT ENTERING THE TREES. INVESTIGATION OF THE ENG REVEALED THAT THE FUEL CONTROL AND PWR GOVERNOR SCHEDULES WERE SET ABOVE THE SPECIFIED LIMITS. THESE SETTINGS WOULD INCREASE FUEL FLOW AND ENG PWR AVAILABLE WHILE DECREASING OPERATING TEMPERATURES; HOWEVER, IT ALSO REDUCES THE ENG SURGE MARGIN AND INCREASES THE POSSIBILITY OF ENG SURGE (COMRESSOR STALL) AND PWR DROP. IN ADDITION, THE COMPRESSION WAS FOUND DIRTY AND THE BLEED AIR LINE WAS LOOSE, WHICH WOULD HAVE FURTHER REDUCED THE SURGE MARGIN. THE NATURE OF THE LONG LINE OPERATION AND THE SURROUNDING TALL TREES PRECLUDED THE SUCCESSFUL COMPLETION OF THE ENG OUT EMERGENCY PROCEDURE.