I actually don't have any idea precisely how pyro damage is calculated per upgrade in DS1, but more offense is always the best thing to spend your resources on. Maxed pyro hand is totally a legit thing to have on NG.
Re: Darkmoon covenant, it's cool in theory but I always had a ton of trouble actually getting matches. Again, can't comment on PC connectivity here, but on PS3 my time trying to invade as a Darkmoon Blade was heavily weighted towards sitting around and watching failed attempt after failed attempt. The trouble (and actual appeal, for me) is that you'll only be invading people with sin, which your average player can dispel by paying Oswald, which means your prime invasion targets are Darkwraiths (whose sin can't be absolved). But Darkwraiths tend not to sit still since you know they're constantly invading other people, so I found it relatively rare I could actually get a match. You could just sit around with the invasion ring on but bleh Dark Anor Londo (I hate the reduced lock-on range there).
Unless they changed the mechanics of this for the PC port, the best bet for invading remains the Darkwraith covenant because that way you can hit anyone at or above your level in any area. You just have to, you know, beat one of the game's most infamous bosses immediately after O&S to access it...although personally, I've never found the Four Kings to be that huge a deal. You've got, what six attunement slots? That's totally enough (it's all I had going in there with a SL50 pyro). The fight is wholly about DPS and Combustion-class spells have got you covered there. The worst part is just getting to them because ghost houuuuuse!
Backstabbery is FAR less prominent in DS2. There's a fair amount I dislike about DS2 PVP, but at least they nuked the tendency towards backstab-fishing that dominated DS1 PVP.
Speaking of DS2 oh hey they patched it again. Tossed the game in to check on what:
-Oh wow they totally nerfed the Avelyn. It's now weaker, slower, and inaccurate. Hardly even worth using anymore.
-Abyss Seal is now only marginally more powerful than the crappy Sunbro ring.
-Haven't tested, but apparently Great Resonant Soul got hit with the nerfbat too. GEE YOU GUYS DIDN'T FIGURE OUT HEXING WAS BROKEN DID YOU
-Never personally used it but apparently Santier's Spear is less crazy now?