Your pretty much on target with your assumptions, dry
is better than wet. Incidentally, if you go dry, you'll want to inject the nitrous just after the intercooler, this gives the maximum time for the nitrous to cool and mix with the air ensuring as even a mixture as the intake manifold will allow.
As to max HP with a wet system... That's a bit of a loaded question!
I've seen some folks get away with things that they really shouldn't have, but if I had to throw out a number, I'd say somewhere in the 100HP range, and no higher... Direct port will cure this problem as it is a question of distribution more than anything else, assuming the bottom end is built to handle the abuse. The number 1 issue with these systems (single point wet), is that the fuel won't get to all the runners evenly. At low HP levels, say 30-50HP, there is enough "extra" fuel from the injectors to "cover" a lean hole caused by the poor distribution. The problem is that as the system is jetted up and up, the amount of "cover" fuel stays the same, which inches that cylinder closer and closer to a backfire... So, that's why we will advise someone to either go direct port, or keep it smallish.
As you probably already know, a 50HP combo on a turbo car can easily pan out to be 75HP or so at the wheels due to the added intercooling and boost efficiency.
You are on the right track regarding adjusting the tune-up, and the timing seems fine too...
A little side note about ignition timing: All engines make best power when they develop peak cylinder pressure around 15-20* aTDC. This is true for just about every spark engine you'll deal with. We often run the total timing in the 35* (bTDC) range in order to achieve peak pressure in the 15-20* range. Nitrous is unique in that it chemically adds oxygen, more oxygen means you can burn more fuel, but since the ratio goes higher (N2O has approx. 14% more O2 than air), the burn rate also goes up. This faster burn means we need to light the mixture later to still achieve the peak pressure at 15-20* aTDC, to what degree depends on how much nitrous is added, and to a lesser degree, chamber design, etc.
We have found that retarding the timing 2* per 50HP of nitrous added, will pretty much guarantee that the timing won't be too much, in fact, it will likely be substantially less than it could be. Most will find best power with 1-1.5* retard from the engine's best "motor-only/non-nitrous" timing.
It is worth noting that the reason we start with more retard than needed is that it will result in only a loss in power and response due to the peak pressure happening latter, say 20-25*aTDC. Too much timing, just like with a turbo or supercharger (or NA for that matter!) will kill an engine faster than anything else you can do, short of a stick of dynamite or a .50BMG round!
Mike