Yes that is okay to do. Be sure to know what your gravity is before topping off with water so you get the right OG. You'll want a higher gravity wort since you will be diluting it.
When hopping with less wort just like extract it will change the IBUS slighty. I'd suggest a program like beersmith or brewer's friend they can be very helpful.
Lastly, bigger pots are awesome so search for money in old coat pockets and couches!