The TUI is chopping the wave, no doubt about it. That's how the power to the engine is reduced. The tui chops the on-time of voltage vs using resistance. The voltage will be the full voltage from transformer but turned off and on at lighting speed. The end result for the heater is there is less on time, more cooling time, voltage being the lesser balance factor in this case, output heat stays low.
Bypass the tui with the Z4k power and I it may smoke better than the CW-80 which is also chopped (I think) If you put the CW thru the tui (don't) it may stay even cooler as the tui could chop the wave up even more.
I would describe your operation as "command conventional" vs "command" or "conventional".... an in-between only missing the command signal. I.e. the tui acts like a small board of a command loco. The larger components for larger PW motor likely wouldn't fit inside a PW loco well. Plus this way doesn't require a board for every loco.
I didn't see it included, or forgot, and it wasn't repeated on this page if I'm not mistaken. Sorry
A low ohm element on a voltage regulator like command units use would be best for you imo. Regulators are postage stamp sized. One of GRJs little boards might even do the trick if you go that route towards "best".
Concerning running it dry. A small switch could shut smoke off should you run out if liquid. Ive added them a couple of times....
Hey, to taylor it to your 2 situations (transf.), an on engine 2pos sw. for hi-low; or 3 pos. sw for off, high, low (add resistors of 14ohm total to a 14ohm element and your at 28ohm again; low)