Yep, it is a really good sauce recipe.
I've toyed with the aforementioned water ratio, and/or 50:50. Both work pretty well - more water is easier to spread on the pies. Most of the time, I go with a ratio of about 4:3, paste:water, as measured in the 6 oz. can, by eye.
I add in a little onion powder to mine, and go with pre-ground, red pepper, instead of grinding the pepper flakes.
I also add in a bit of basil too - about 50% of the oregano added.
Finally, a bit of white sugar to balance, if it is too bitter - 1/2 - 1 tsp, depending.
This sauce is not cooked, but is applied as is to the pizza crust.