Can you use photon spheres or drops at paganini to upgrade the non-hit %s once its a dark weapon still? For some reason i recall someone warning me you can only add %s to dark weapons through dts. Maybe they were just talking about hit.
Yes, you can add attribute points on a dark weapon through Paganini.
Also, is hit essential on a dm even if you capped your ata? Is it just always needed on a dm?
It is not essential. Some people have 3 attributes Dark Weapons and they work fine. Having some hit make you miss a lot less, though, especially in Episode 2 where the enemy's Evasion Points are pretty high. It is to the player's discretion.
Is there a combination of %s that is particularly useful?
Native/Dark is useful for Episode 4. A Beast/Dark is good for RT and Max Attack S (ep 1). I don't see the appeal aside from that, though. Machine/Dark (what I use on my DM now) is great for Tower, TTF and Seabed. In my opinion, Dark is too good to pass up on your first Dark Weapon, since most big monsters (Delbiters, Bringers, final bosses, etc) are that attribute. Whichever attribute you take as second is based on what you're using it for and personal preference.
Dm has to be transformed from a shot right? Can you transform from rare shots or just orange boxes?
You can only use normal white or green (sometimes yellow if it's an Arms with a good special) shots (Shots, Spread, Cannons, Launchers and Arms) to make your Dark Meteor, so yeah, basically orange boxes. You cannot, for example, take a Final Impact to make a Dark Meteor. Make sure your shot is fully grinded and you have the required level and ATA to transform it. As already mentioned, the best way to get a good shot with 50 in 2 attributes (guaranteed) and 50h (not guaranteed) is through the quest The Restless Lion, on a Racaseal NPC. However, the chances of finding one with 50h is low, so I suggest just buying one from somebody.
The requirements to combine for Dark Meteor are written here: https://www.phantasystaronline.net/forum/index.php?/wiki/item/&id=009E00. You also need 200 ATA on your Ranger, including Slots and Mag, but not Inherited Armor and Shield bonuses.