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Yes, you may prune the dead growth from your dusty miller so long as you are careful not to disturb the new growth.

For more information on growing dusty miller, please visit the following link:
https://www.gardeningknowhow.com/ornamental/foliage/dusty-miller/growing-dusty-miller.htm

Here is a link with care information.

https://www.gardeningknowhow.com/ornamental/foliage/dusty-miller/growing-dusty-miller.htm

Dusty Miller should be hardy in zones 8 - 10.
It could be a tender perennial in your zone 8 area.

I would add some winter mulch protection and wait until spring to lift and divide the plants.

https://www.gardeningknowhow.com/ornamental/foliage/dusty-miller/growing-dusty-miller.htm

Dusty Miller germinates in 10 to 21 days at 75 degrees F.
Start seeds in mid February. They will need 12 to 13 weeks of indoor growth.

https://www.gardeningknowhow.com/ornamental/foliage/dusty-miller/growing-dusty-miller.htm

You can use cuttings from dusty miller to propagate the plant, but you don't root it in water. You root it in a soilless media (perlite, verimulite, sand, peat moss, etc.)

This article will tell you how to prepare the dusty miller cutting and root the cutting:
http://homeguides.sfgate.com/propagate-dusty-miller-20455.html

Additional information on rooting plant cuttings can be found here:
https://www.gardeningknowhow.com/garden-how-to/projects/rooting-plant-cuttings.htm

For more information about the dusty miller plant, please visit the following link:
https://www.gardeningknowhow.com/ornamental/foliage/dusty-miller/growing-dusty-miller.htm

Yes, it is possible that the reclaimed water could cause these symptoms in your plants. Depending on the particular characteristics of this reclimed water, it may contain higher levels of salts, nitrogen, phosphorus, etc. than tap water would. Nitrogen and phosphorus can feed plants, but in excessive levels they can damage plants, and salt can also damage salt-sensitive plants. Perhaps your homeowner's association or municipality can give you more information on the reclaimed water nutrient and salt content.

See this article for more information:
http://edis.ifas.ufl.edu/ss544
http://tbep.org/how_you_can_help-lawn_fertilizer_and_tampa_bay-what_you_need_to_know_about_reclaimed_water_and_fertilizer_use.html

Here are some articles on salt tolerant plants in case you need to replace yours:
https://www.gardeningknowhow.com/special/seaside/gardening-salt-water-soil.htm
hos.ufl.edu/sites/default/files/faculty/gdliu/Salt-TolerantPlants_FL_Black_03_0.pdf