This is a technique that others have had a lot of good success with, so you shouldn't have too much trouble.
I suspect that if you dry-hop, you'll get less extraction using the higher-gravity wort. The yeast also will have trouble if your gravity is really high. That said, the extra half-gallon of liquid shouldn't make too much of a difference for either variable.
One thing I would be concerned about, however, is the process of mixing the fermented beer with the water. Definitely purge the serving keg with lots of CO2 before you transfer, and then shake the bejeezus out of it to mix thoroughly.
Primary 1: Hasty IPA
Secondary: Soured Golden
Kegged: American Wheat
Bottled: Belgian Golden Ale.
Planning: American Amber