I don't think dry hair is the reason for low sebum production. I think not taking out too much sebum in the first place prevents the body from overcompensating for the loss by subsequently overproducing sebum. I used to use a shampoo and conditioner for oily hair every morning — by the next morning I'd look like I'd slathered oil on.
Nowadays I use water every other day.
I think the thing to be careful of with conditioner washing is that it can leave residue if you don't wash it out very well. It's been a while but I seem to remember being advised not to rub conditioner into the scalp.
7-10 minutes is quite long but not excessively so.
I'm not sure whether conditioner washing every day or every few days would be better — conditioners are usually designed to compensate for the things shampoo strips your hair of (otherwise you'd just keep building up "extra" stuff on your hair — when a conditioner's too "rich", it really leaves your hair horrible (I've tried it before)).
Do consider water-only — not necessarily completely but perhaps between conditioner washes (although I'm not sure how it'd work if you use styling products). This (extremely long) thread explains it all: http://forums.longhaircommunity.com/showthread.php?t=3412
Well, been working with the same routine for a couple weeks now and it's great. Hair seems to still get dry/frizzy whenever I wash it on Sunday (and still a little bit on Monday). I don't think I could do water only, because my hair becomes very tangly and tough if I don't use it in the shower (not sure how it would be dry). I don't currently use styling products except for special occasions.
Another question though:
You guys talk about sulfate free shampoo, I am thinking about picking some up tomorow. I need to know if I use it once a week (like I am now) will my hair end up too oily by say...Thursday/Friday? Water seems to be doing pretty good about taking the right amount of oil out (I guess it would get a little bad if I didn't wash every Sunday with Shampoo) so I don't think I would have to change my schedule. In other words, how big is the difference between using sulfate free vs regular moisturizing shampoo? Do I use it differently?