I haven't noticed any difference in build performance for my small project with the max heap size set to 256MB (-Xmx256m).
Note that you might need to restart Android Studio so the old Gradle process is killed; otherwise you might end up with both running at the same time.
Emulator
Regarding the emulator taking up a lot of your RAM, your screenshot shows it taking about 800MB. You can choose how much RAM to allocate to the emulator: