Michael Lane
Your understanding of humidity effects is correct except for this one sentence;
"As air gets cooled humidity goes up air is less dense so bullet impact is higher."
The effect of temperature is many times more important than humidity. The cooler temperature makes the air more dense.
To use aeronautical terms, the best way to reference things is to Density Altitude, which is your actual altitude corrected for temperature and humidity differences from the "Standard Temperature and Humidity." Pilot shops sell calculators, electronic and mechanical, which will calculate Density Altitude when you plug in the numbers. In very hot weather, your Density Altitude can be 5000 feet higher than your actual altitude. Most ballistics programs also allow you to adjust them for non-standard temperatures and humidity.
Jack