I think that you're operating under the false assumption that the main vulnerability of Dreadnoughts were the magazines. The magazines were normally very well protected beneath the waterline; barring the organizational failures that lead to the Royal Navy not following safety procedures and keeping the firewall between turret and magazine shut, a battleship could survive even a shot to a turret.

On the other hand, the huge armor piercing shells fire by battleships, or mines or torpedoes for that matter, didn't in any way need to strike a magazine to be effective, they did well enough damage on their own. Churchill while First Lord of the Admiralty is famed for describing battleships as "two eggshells striking at each other with hammers."

Producing a battleship sized ship involves an immense expenditure, whether its filled with explosives or not. Your decoy ship example still has to be able to maintain +30 knots in order to keep up with the fleet, and as you describe it firing blanks still has to have some functional armament and the heavy mechanics to shift the turrets around. Unless it's supposed to be a floating death trap for the crew involved it has to be immensely armored (which still in no way provides absolute protection), which puts further requirements on capability of the engines. Lastly you need an immense crew of a ship this size who are willing to run this toothless death trap until it sinks, most likely catastrophically. You've basically built a very bad battleship, so why not use the same expenditure to build a good one instead?

Also, just as an FYI, Dreadnoughts only describe early battleships built in the beginning of the 20th century, after the eponymous ship British battleship. By WWI most of the surface combatants were designated super-dreadnoughts or battlecruisers, and ships produced past the Washington Naval Treaty are often spoken of as Treaty or Post-Treaty Battleships. Talking about Dreadnoughts in a WW2 setting is anachronistic.

Not really no.

The biggest reason is that the line of battle was already too long and hard to control as a cohesive unit, or to allow a commander to know what was going on.

And example would be Dogger bank were with just 5 BC's Beatty was unable to maintain cohesive control when his ship suffered damage, and messages were not relayed effectively. WW1 was still the age of flag signals(which remain useful even today) so the longer the line the harder communication gets.

So you either risk more problems, or remove a ship that can actually do damage to one that just sits there.

The standard practice also was to have ships in both fleets engage the corresponding ship in the enemy line, so with excellent German gunnery it is entirely possible that the "decoy" ship gets shot up, falls out losing speed, disrupts the aim of the ships behind it as they avoid it, and then the German ship just gangs up on a new target ahead or behind without having taken any damage.

FWIW Churchill did have several merchant ships reconstructed to look like dreadnoughts and BC's, but without as much speed. They were used in coastal areas to bait submarines essentially. But even they were found to be a waste of time, resources, and precious trained crews needed in fighting ships.