I've experimented with methanol injection in my vert, same process. They make kits for the grand national guys, they are very much into this. Power increases from 30-80hp depending on boost, and it allows you to run another 5-10psi of boost on pump gas. You use a 150 shot nitrous nozzle and you need an inline pump, methanol/water mixtures are SO cheap, and you can totally waste someone using it, and barely hang without it, so definately useful for high boost applications.
Water injection does not cause a loss of power at all because of oxygen molecules, the cooler, denser air charge contains more combustable oxygen.