Oh god, here come the wild conspiracy theories. Just because we don't understand why they are ahead does not mean they have a secret card up their sleeve. Most probably they have just refined the way everything interact between the different components of the PU. The have benched the engine much more than their opposition, done more simulations, tried more variables and have a more complete picture of what is required from the PU. This new formula is after all a pretty complex setup with many variables and possibilities.
Going by pure top speed, the new Ferrari PU seem to be on par with the merc PU so probably the case is just that Renault and Honda suck (sorry fans of Renault and Honda if I stepped on your toes). They have not done their home work properly/have not had the funds to do their home work properly. I'd say the main reason Merc is so much ahead is because the chassis dept made a deal with the devil.
Water injection does not make power, quite the opposite. The reason you water inject engines is to reduce NOx emissions (at least in all the applications I have ever heard of, I do not claim to know everything about engines hahaha). Combusting Lub oil will not give a massive increase in power as it is not designed to have a high calorific value or even burn quickly for that matter. Sure, engines can rev to bits on lub oil, it is known to happen, but those engines are not under load (and this gives off smoke like nothing you will have seen).
I could maaaybe understand cheating with the fuel flow. That you could probably do by manipulating the signal from the sensor or bypass the sensor slightly or stuff like that. This is small stuff you can hide.
All the rest makes no sense to me... I should add though that I am only a simple engineer for ships engines so I have no practical experience with formula engines and I have been wrong before, hahahaha.