Just did some testing and it appears that the increased trade distances not only doesn't help sea trade income, but in fact, hurts it.

This was done using my custom mod (which substantially increases trade income and reduces farm and tax income).

Genoa - port_to_port_mp value set at default 100:

Trades with Toulouse



Toluouse - port_to_port_mp value set at default 100:

Trades with Genoa



Genoa - port_to_port_mp value set at 400:

Trades with Bologna:



Toulouse - port_to_port_mp value set at 400:

Trades with Rome



It looks like that with the increased distance modifier, trade routes are chosen based on the furthest port you can reach. Not on whether you can actually make more trading with that port. It's not like Genoa ditched Toulouse (or vice versa) for a more lucrative trading partner in this case, so it must just go for the furthest port within distance (just a guess).