To my understanding, position 2 and 4 on a strat makes the two pickups get wire reversed wound for low noise and also paralell, which has lower output than series. So a switch is added to change them to series it would give a better distoted tone correct?
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well, if the middle pickup is reverse wound in positions 2 and 4, then it's always be RWRP, it's not just that way in positions 2 and 4
but yeah, positions 2 and 4 in a standard strat are hum-cancelling, and with the coils in parallel

to the rest of your question: essentially, yes

having the two coils in series'll give you a more humbucker-y sound (still wont sound like a humbucker, but it'll be closer, at least)