I built an A14 turbo a couple of years ago, with a huge turbo and draw through 32/36 Weber. It was good for 8000rpm @ 12psi with the standard mechanical fuel pump, so I reckon the problem you had might have been more to do with the capacity of the standard carb's fuel bowl.
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why waste that valuable space with uncombustable steam when you could put in more air and fuel?
water injection will cool the inlet charge resulting in a denser charge - ie it helps you get more air and fuel in. Also, water contains oxygen, and in it's gas state is not uncombustible. It will not adversley affect the combustion process, it will significantly improve it. Water injection also eliminates carbon deposits forming, and will actually remove existing carbon deposits, which helps increase gas flow especially behind valves and over the top of the piston (which once again means more fuel/air in). Carbon deposits also cause 'hot spots' which can cause pre-ignition.
my understanding of deisel turbos is that due to the narrow operating range of a deisel engine and their torque characteristics, their turbos are designed to work over a fairly narrow band of (turbo) rpm. ie to come up to peak efficiency quite quickly. And they will exceed that peak very quickly on a petrol engine which operates over a much broader rev range, and the turbo will make more additional heat than increased volume of flow as it's revs rise.
good luck with the turbo, I'm thinking about building another one as well. I reckon with a more suitable sized turbo I should be able to get at least as much power as I currently have with the L18, but with significantly less weight over the front axle, so it should have handling and braking advantages.