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So 4 infantry Coys would be a bad idea then?
If you want to go more heavily on the infantry, I'd recommend using an army list such as the Baran Siegemasters or the Death Korps of Krieg.
They have things like trenchworks and static artillery that's more suited to such a style of "infantry wave" warfare.
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I thought that 9 activations was pretty good for a guard army

I normally run ~10 activations in my Guard army, and do okay (win more than I lose, generally fetch up in the top third in tournies). So I reckon 9's okay. I wouldn't go below 9 though.
Also, as 2 of your activations are sentinels, your opponent might try to take you down to 7 activations pretty quickly.
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How about if I remove the Leman russ company (they are proving elusive on ebay anyway) and add 2 warhounds (presumably these would cont as 1 formation?), a thunderbolt flight and attach some ogyrns to my leg infantry?
The Warhounds are always nice. Yes they would count as 1 combined formation. Unless you buy them as two singles (But then, if you're using the net-developed list or EpicUK tournament list, you'll be charged 50pts extra for the privilige).
Thunderbolts are great.
I prefer to get Ogryns into Mech Inf. formations if I can, so that they stand a chance of reaching CC during the game.
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The hellhounds are staying as they are some of the few models I actually own at the moment

I sometimes run hellhounds with mech. inf. Although 25pts overpriced IMO they're not a terrible choice as they do hit hard and have the speed to keep up with the formation.
Other generic advice:
I think Stormtroopers in Valkyries are fantastic (They can Firefight well, shoot exceptionally, and are fast enough to go grabbing objectives), for Steel Legion armies.
Most Steel Legion lists try and include at least 1 artillery platoon, as it helps force the enemy to come to you (Where you can bring your (typically) greater numbers to bear).