Bob, I disagree with the meat needing to be "dry" before putting in the smoker. I would lay it in wet, right out of the fridge, set the dial to 140 and let it go for 2 hours. It will absorb smoke best when it's cold and wet. Then it's dehydrator time!
Hey Tony, I attended a BBQ Boot Camp (as they call it) at our local university (North Dakota State University - Home of the 2011, 2012, 2013, and 2014 FCS National Football Champion BISON) and the faculty and food scientists that conducted this boot camp told us that smoke will not adhere to wet meat.
NDSU BBQ Boot Camp
https://www.ag.ndsu.edu/ansc/news-events/copy2_of_bbq-boot-camp-rugbyI think this is the same reason that we try to dry our fish to form a pellicle prior to smoking.
That being said, if I brine my meat, I usually dab my meat as dry as I can with paper towels before smoking. But, it is by no means dry and I have always had great results.
Most of my jerky is made with High Mountain dry seasoning mixes that I mix with fairly wet meat and marinate overnight. By the time I smoke, it is more sticky than wet when I smoke it.
The bottom line is that I am not sure how big of a deal it is to have your meat really dry prior to smoking. But, regardless of whether you dry your meat prior to smoking or not, you must either use a dryer of sorts or pull the meat and put into a dehydrator.
If you are only smoking for a couple of hours and moving to the dehydrator and considering your space issues in the #1, your best bet is probably to stick with the skewers. But, if you were not using the dehydrator method, then I think you would still be better off smoking horizontally and rotating the trays even if you have to do smaller batches.
Regarding the temps that I had mentioned, I was primarily talking about set temps. But, the bottom line is that through some trial and error you want to find the lowest set temp that will still allow you to achieve smoke especially if you are smoking your jerky in the smoker for the entire smoke. If you move to a dehydrator, a few swings up into the 150s would probably not hurt.
I have purchased the jerky rails and some extra racks and they do work really well.
Good luck on your next batch. Take some pictures and let us know how it goes.