Funny you should make this change as the first thought I had when reading your first list was that the PsyCans should be on the Termies in a foot slogging list as they can shoot the full range of the weapon when on the move.
Is this tweak an improvement or am I better off with the original where the small squad can sit on Objectives and snipe?
HQ:
Brother Captain: Psycannon (91)
Retinue: 4 Grey Knight Terminators: Psycannon (209)
A tough unit in CC but a little vulnerable to Anti Tank weapons from the opposition, thankfully you have the Dreads. If you had no tanks/armour this is the unit the AT weapons would shoot at your GKT to devastating effect. If the Opponent is smart this is still the unit he should shoot at reguardless.
I always recommend a TH/SS model is in this unit for Dread/Defiler/MC protection
Troops:
7 P.A. Grey Knights: Targetter, Frag Grenades (202)
7 P.A. Grey Knights: Incinerator, Targetter, Frag Grenades (212)
The ability to run in fifth ed. makes this list slightly better but normally a foot slogging GK army isn't the best list. At 1000 points they do much better due to the 24" SBs and NFW making them good at shooting and good in CC. That tactical flexibility is very important to your success i.e. shoot the specialist CC units and assaulting the shooty units.
The incinerator isn't as useful in a footslogging unit as when coming out of a LR or DSing w a Teleport homer as your lack of mobility negatively affects its potential, better on the Dread.
Always use your terrain and cover to the GKs advantage. Even w power armour they are too important at 25 to 50 points each!
Heavy Support:
Grey Knights Dreadnought: Lascannon, HF/ML, S.Launchers (143)
Grey Knights Dreadnought: Lascannon, HF/ML, S.Launchers (143)
I would have one Hell fire Dread to pair with the GK and the other Dread kitted w a DCCW/TLLC to move with the GKT. Extra armour is needed for the Dreads as they must keep moving, your mobility is hampered enough with out str 6 weapons stunning it to inefficiency.