Yes, water to saturation and then wait until the soil is dry at depth before watering again. The hole at the bottom should keep you safe from any potential harm due to watering deeply, as it will allow excess water to leave the container, but you can also check visually that this happened, given the container is translucent.
It's pretty much normal for the plant to look pretty sad while it is rootless, maybe a few lower leaves die back, so that would be expected. Up until the point when the new roots are able to take up some water and rehydrate the plant.
Your setup looks good and it should work great provided you have the grow lights dialed in (strength and duration). Expect the process to take weeks to months before there is a dramatic turnaround.
