About the arcing.... there is no way arcing will occur between the WFC gap when filed with water.
The reason the fuse blows, it is because water will conduct more as the voltage increases.
Adding the resistor just puts a limit on how much current you allow, then preventing from blowing the fuse, but also making the whole circuit way less efficient.
So I don't really see it as voltage performing work, I see it as a current limiter, and if you have no current at all, there will be no production at all.
Maybe I'm wrong ? but I'm also a hands on experimenter.