It appears that 7k to 8.5k is a "golden mean" for a living elevation and for and doing easy base training. Some sea level parameters which are influential on running performance can actually be REDUCED by prolonged exposure to high altitude, so you don't want to be TOO high. And, if possible, you want to get down to more moderate altitudes (3k to 4.5k, maybe 5k) for some high-end aerobic running and as close as possible to sea level for still faster running. There's nothing wrong with spending 10-12 hours per day on a couple of successive days at somewhat higher elevations (9k to 12k); in fact, in h-a responders, this may provide an additional Epo boost.
Yes, you need to make sure you're well hydrated when performing any endurance exercise at that altitude. You might also benefit from taking some liquid Iron in a fruit or vegetable juice for 10 days prior to moving to h-a to make sure your Iron stores are adequate. Do not run hard at first. In fact, just spend a couple of days walking around up there before you attempt any running.
Slightly off topic, but ... the jury is still out on the effectiveness of tents or other hypoxic chambers vs. actually relocating to h-a. With the tents, you can get "intermittant hypoxia", which seems to be BETTER than continuous exposure to h-a. But you CAN'T actually do any RUNNING in the tents, and running at the proper speeds at various altitudes unquestionably improves lactate buffering capacity and increases oxidative enzymes.
As far as the hypoxic ventilatory response (HVR) is concerned, that appears to be different from person to person, and it also appears to be mainly an inherited trait. Mr. kohlberg, were you involved with one the studies under Ben Levine and Jim Stray-Gundersen? Kyle Heffner and I looked at some of their (and other) preliminary work and of course relied on our own experience (his in Colorado, mine in New Mexico and Switzerland) when deciding to select Flagstaff as the best location (or certainly one of the best) for hi-mod-lo training.