I should mention first of all that there are no guitar techs in my city and I play a Squier California Series Stratocaster

I recently experimented with setting up the guitar.

I tightened all the screws on the bridge plate so that the bridge would not move in the hope of increasing sustain.

Then I changed the action to fender recommended 4/64" on all strings(measured from 12th fret). My fretboard radius is 9.5"

Then I changed the pickup heights to 8/64" on base side and 6/64" on treble side(measured by depressing strings at last fret of 4th(D) and 1st string(e)).

Now there are 2 problems:

1. Intonation was perfectly done on all strings except 1st string where I pushed the saddle towards the fretboard cuz it sounded flatter at 12th fret. But even after pushing it all the way, it touches the bridge plate screws, it still remains flat.

2. Starting from 12 th fret and 3rd to 6th string, the bends are good. But if bent more then a whole step(2 notes), it suddenly goes dead. No sound. I was trying this Another brick in the wall solo and it sounded dead on the longer bends!

P.S: It sounds perfect before 12 th fret. Almost Original Fenderish tone! HELP!
When you bend is the string moving too far away from the pole piece? Tightening the trem down may have moved your bridge back a little, causing the travel of the insert to be more limited in the forward travel. May be why your intonation is off. Hard to diagnose problems remotely so forgive me if what I say doesn't help.
strats have a quite tight radius, so bends are going to die out on the higher frets, as when you push the strings up, the bend in the frets causes the string to touch the fret, so it frets out. i think the only remedy is to raise the action
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Its hard to diagnose the issue from just the discription you gave, but what I would suggest is undo the changes that you did. If/when you do that, you would be able to tell if the negative affects of the alterations were due to the actual adjustments themselves or were the result of integrity damage (i.e. electronic malfunction or a structual integrity compromise) My guess is that the pickups are too close the strings and the magnets are getting overworked, however that is just food for thought because I've never seen the guitar in question, nor witnessed the malfunctions first hand.
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Did you tweak the truss rod as well??? That has alot to do with setup, but now you're treading into very touchy waters.
I know its a pain in the *** but your best bet is to do what Celloreiter said.