Converting upright charcoal smoker to electric
1- The meat drying out is a very real problem when cooking for so long. When I have smoked with water it has seemed to be less of a problem. I'm sure it also gives a nice thermal buffer but I haven't conducted experiments on this.

2 and 3-
When I built the AB style smoker mine was smaller and earthenware so it would retain heat better. My cheap little hot plate was not able to get the temperature up to even 200F.

With a bigger smoker and one made out of metal I don't think a normal little hot plate will be able to get hot enough. You can experiment of course. It may be that my cheap hot plate was just under powered.
In my smoker I adjusted the hot plate temp knob as necessary. Eventually of course it stayed at full on.

If you are interested in more of a project- there are many hobbyist projects for making temperature controlled smokers. They would be more work but for an excellent reward. I was just looking at this one today that uses a wireless router for a web interface and an Arduino for control. Kind of like a homemade sous vide setup but for a smoker:
http://tvwbb.com/eve/forums/a/tpc/f/9270072103/m/5721075126