Liverock itself is not going to help you to reduce your nitrates, especially with so much of your plan revolving around dead rock.
The anaerobic bacteria in liverock is what converts the nitrates into gas. Dead rock contains no anaerobic bacteria and the anaerobes can take years and years to develop to a point where it is helpful. Thus adding more liverock while expensive, is not going to affect your nitrate levels.
IMO you would be better off still using that 55g but filling it with a type of macro algae and a couple of clip on lamps.
The macro algae will consume the nitrates as well as help to stabalize pH, and filter out other toxins. It would prevent you from having to upgrade your skimmer as well.
There are a few choices for macro algaes the safest bet being chaetomorpha. it is a relatively fast grower and is very stable. It also has the least risk of making it's way into your display. The second choice would be green grape caulphera. It is a very fast grower and consumes many nitrates. It does have to be pruined more regularly then chaeto, but that just means it's abosorbing more nutrients. This algae is more prone to going sexual, but this can be avoided with using a 24/7 light cycle on the refugium. If your going to use green grape then I would strongly suggest a sponge in between your refugium area and your return pump. Some sponges will prevent the algae transfer, but not the pods. JME
Another biological an very natural method you could do with the 55g is include a seperate area for a DSB that receives no light. If it were me I would put it where the water drains into the sump. Then seperate the DSB area from the refugium area with a piece of black acrylic (just a black baffle). This would be the same as setting up a remote sandbed, like the kind some reefers use in buckets next to there tank. I would put about 10 to 12" of sand in there and make it around 1.5 square feet. Then you could use the first 1.5' as the DSB area, the next 1.5 feet as the refuguim area, and then still have plenty of room for your return pump chamber. Still cheaper and more effective then buying all of that rock.
There are chemical solutions such as Seachem's denitrate, but they require lower flow and are not as effective as the use of macro algaes and DSB IME.
The readings of your source water are also of concern. If the ammonia is reading that high then it is likely the filters on your unit need to be replaced. Ammonia really needs to be at 0. If it is not then you are basically pouring fish pollutants and algae food into your tank everytime you do a water change. The ammonia will break down into nitrite, then into nitrate and then be used by the algae to grow. Your skimmer can pull some of this out, but not nearly all of it, the nuissance algae is a far more effective feeder.
If you are experiencing a major algae problem, keep in mind your tank reading of nitrates is what is left after the algae has consumed it's nitrate food, you are testing the left overs. Without the algae the readings would be much higher.
If you can I would also test your source water and your tank water for phosphates.
Even after you install the refugium, or whatever other equipment you choose to go for then you will still have to contend with the algae in your system. If it is bryopsis then it can be handled with a magnesuim teatment. Basically you rais ethe magnesium level to 1600ppm at 100ppm intervals. Keep the levels there for around 5 days, then stop dosing magnesium until the levels return to normal. During magnesium treatments you will have to keep an eye on Ca and Alk readings as they will greatly fluctuate, usually more addatives are needed of each to maintain stabilitity. Make sure to use magnesium chloride not magnesium sulfate as it will kill inverts.
If it is hair algae then get some turbo snails. i also like to do some manual extraction for hair algae to help speed up the process. I do a WC, keep the discarded water, and then scrub the rocks in the old water to get all the algae of. It doesn't cure it but greatly helps it, especially if the source of the problem is fixed.
I think that's enough rambling for one post, afterall I am new to this site.
HTH, let me know if you have any questions.
