Dave,

You're idea to saw cut around the entire pool is gonna' be your best option. Neither grout nor plaster will "feather edge" very well.

Color mismatch you'll have to live with. Try a small area 'til you get a mix you can tolerate. I would suggest you fill it with grout so you can grout the tile and fill the void with one step.

All masonry products will absorb water but whether you use grout or plaster won't make too much difference.