Difference in volume is small but it makes 0.2-0.3 difference in compression ratio. Not very dramatic though but if the engine is running on the edge of detonation it matters.
Yep, it should be interestingI'm planning for 1bar / 15psi maximum boost or maybe slightly more. I got the turbo from a guy who was using it on very similar engine. He got about 300hp at 15psi and 370hp at 24psi.
Water injection will be for charge cooling and detonation control. I'm not going to use an intercooler. I think that an intercooler that is large enough for intended power would be too large for reasonable installation. And it would be difficult to install so that it won't take too much heat from the engine and the headers when there isn't enough speed for proper air flow.
So the water injection will be only charge cooling method. I have an Aquamist set with high speed water valve. With that I can use the Megasquirt to control amount of water and thus keep water / fuel ratio constant for different load situations. That should allow larger amounts of water at top end without flooding the engine at mid range.
I think your choice of water injection is a good one, with the mods and boost you'll be using.
The pros and cons of intercooling vs water injection do need to be weighed carefully. One advantage of intercooling is that you can design the system that incorporates packing ice around tank area for "special events" such as turning up the wick on the drag strip. This is a way of adding considerably more cooling over short durations. But you're right, the cooler size is a major dis-incentive to this system.
One bonus that comes from using water injection is that the amount of carbon build up in the combustion chambers is minimal compared to normal aspiration. The superheated steam does a great cleaning job in that area.