If you are limited by space, the best thing to do will be to move the water mills closer to the centre cable in your towers. Each mill will generate less, but you'll fit more in and end up producing more EU. I'm not sure if you've fixed it since, but to clarify about the maximum output you want as many water blocks as possible touching water mills. Your images appear to show that your Batboxes are up one block and the extra distance made up by fibre cables. If you move your Batboxes down one block you won't need as much cable, and the pieces of fibre cable in between your tin cable and Batboxes can be replaced by more tin cable, which is cheaper. Keep the fibre cable on the output though.
And yes, water mills can share water blocks with other water mills, so you can overlap the 3x3x3 spaces around them just fine. In fact, you could remove the walls between your towers and move them so that there's only one block of water between them to save a bit more space. Otherwise it seems good to go, although you should note that the Batboxes in parallel (both outputs into the same line) will output at most 64EU/t and your MFE's in series (one outputting into the other) will be capped at 128EU/t, although by the time you find these numbers limiting it will probably be a good idea to look into more powerful generator options like reactors and steam turbines.
One last note is that tin cable will run 39 blocks before losses (losses on the 40th block), the same as fibre cable. The glass fibre cable allows you to accept power from energy storage and transformers, however, so after 39 blocks you can put the energy through an energy storage (or transformer block for anything LV or higher, if you use fibre cable) to reset the distance, but you can't use tin after the energy storage block.
Glad I could help