One question at a time! ;-)

1. Making evaporated milk from powdered milk ("dry milk"): should be possible. Your suggestion is certainly reasonable, especially since [powdered milk](http://en.wikipedia.org/wiki/Powdered_milk) is basically just "really dry [evaporated milk](http://en.wikipedia.org/wiki/Evaporated_milk)" but I've never tried it. Reading a bit on the above links describes subtle differences in the way that evaporated and powdered milk is produced, so of course your results might vary. You may even be able to get away with just mixing an extra powdered milk in water (i.e., without heating) but perhaps you'll need some heat to dissolve it fully (or get the "caramelization" you speak of, but I (personally) associate caramelization more with sweetened condensed). There are also different forumulations of powdered milk ("instant" versus "non-instant" for example), so your results may vary (e.g., how difficult it is to dissolve the powder in water) depending on the type you use. I think both powdered and evaporated milk are generally non-fat (skimmed) so you should be okay with (lack-of) fat content also.
1. Using [sweetened condensed](http://en.wikipedia.org/wiki/Condensed_milk) in place of evaporated milk and (reducing the...) sugar: should be possible. The opposite situation (making sweetened condensed from evaporated) is asked in [this question](http://cooking.stackexchange.com/q/4600/25286). [One answer says](http://cooking.stackexchange.com/a/4605/25286) to add about 1.25 cups of sugar per cup of evaporated milk to yield sweetened condensed. Based on that, I'd say that if you have at least 1.25 cups of sugar to reduce from the recipe *for every cup of evaporated milk*, that's an option also. That seems like a *lot* of sugar!  Even more so than powdered versus evaporated, I think you'll be able to tell more of a difference in evaporated versus sweetened condensed because of the caramelization of the sugar in the latter. Also, due to the sugar, sweetened condensed milk doesn't require as much processing (added sugar inhibits bacteria, [according to Wikipedia](http://en.wikipedia.org/wiki/Evaporated_milk)).  As far as reduction amount: I wouldn't think of it as a "reduce by X percent", but rather as a reduce by an absolute amount (volume or weight), factored by how much evaporated-to-sweetened is being exchanged.  E.g., if you have 2 cups of sweetened condensed in place of 2 cups of evaporated, reduce sugar by 2.5 cups.  Doesn't necessarily relate to 30% reduction or whatever.

Over in the **Related** section there are other questions about conversion to browse!  Good luck!