This has probably already been said, but 20" is about as long as I'd run on a 261. The oil pump will likely struggle to keep up on anything longer than that. 261 normally runs .325 pitch chain and the longest bar they make for .325 chain is 20". Swapping to a .375 pitch rim/drive sprocket will allow you to run a .375 pitch chain and bar. They make just about every length bar in .375 pitch.
Personally, I wouldn't go more than 18" on a 261. If the 16" bar cuts 70% in one pass, I'd say its the ideal bar length for what you're cutting. Its easy enough to cut from both sides for the other 30%. Realistically, a 16" bar can cut an 18" log in one pass if you use the right technique. Running a longer bar reduces the amount of tq and hp available to make the cut. Going with a 20" bar so you can make 30% of your cuts in one pass will slow the saw down for the other 70% of the cuts. It also cuts slower on the 20" cut, but it may be faster than having to walk around and make the additional cuts from the back side.
If most of what you cut is hardwoods over 12", and you're you're cutting enough that the 16" bar seems to be slowing you down, you might want to consider a 60cc or 70cc saw with a 20"-24" bar. I cut a lot of hickory and oak in that size, and my primary bucking saw(s) are my 036s. I run 18" bars on them, and I can generally reach through 20"-22" rounds without having to walk around and cut from the other side. If I'm going to be cutting a lot of stuff that's in the +18" range, I'll pull out a 90cc saw just so it has a chance to run once in a while. I bought the big saw because I occasionally get into stuff that's in the 30"-50" range. I don't have a 70cc saw. If I did, I'm not sure I'd ever start my big saw. I have an 026 as well (predecessor to your 261, and about 20% less hp), and a 16" bar is ideal for it in hardwoods. I use it mostly for limbing, but I'll also grab it for bucking up stuff that's in in the 8"-10" range.
I will say that every saw I own gets the muffler gutted, and the carb re-tuned accordingly. Yes, they are louder, but ear pro is mandatory if I'm running a 2 cycle tool anyway. If I wanted something quiet, I'd buy a battery powered saw, which I may do at some point.