Kevin, when I did a similar wiring harness for my EDM projectors, I ended up wrapping my relays in plastic bags and tape. It didn't really help all that much... I still had relays fail on me. Hell, I remember after one meet walking out to my car to find one headlight switch on because during dinner a relay failed open.
Over the 4 years or so I've had my lights, I think I had 3 relay failures, all due to corrosion. So do what you can to seal 'em up, and use dielectric grease on all the connectors.
As far as the ballasts switching on and off... When I was testing my switch, I would turn the low beams on, then very slowly push the lever forward to turn on the hi beams. At the switch over point, *both* low and hi were grounded. If your car is the same as mine, you shouldn't have a problem w/ going from low to high. However, I'm not sure what happens when you FTP, or go low to FTP... the circuit could be interrupted, I never tested that.