So you're more or less talking about a sump.
The popular concept of a refugium is a tank with some sand some macro algae, and a place for critters to breed and feed more or less unpredated.
Extra water volume doesn't help with dilution of wastes. It does however help with stability of parameter like calcium, mag, alk etc, as there is a larger pool from which the corals can obtain this stuff.
Why doesn't it help with wastes. Well from the skimmers point of view, it has a fixed volume of water passing through it an hour, no matter what the total water volume of the system is. Now the skimmer efficiency (for lack of a better word) is related to the concentration of waste in the tank. So lower waste concentration means the skimmer removes less per hour, higher waste concentration means the skimmer removes more per hour.
If you take that, then you'll see that the concentration of waste is not related to total system volume, but the skimmer parameters.