Can milk chocolate plus cocoa powder substitute for dark chocolate?

You wrote that you want to use this in baking and that's important. This idea will work well for baking but it seems like it would be much harder to pull off in tempered chocolate application like molding or dipping.

Adding cocoa powder to a baked dish that contains milk chocolate will do a great job of bumping up the chocolate flavor. I don't know ratios, I just add it to taste.

The problem is that it is not the most versatile idea. Baked goods that will work with a cocoa powder boost would have to chocolate throughout- like chocolate cake. These recipes often call only for cocoa powder and have little use for the milk chocolate. On the other hand, recipes that call for chunks of chocolate- like cookies- would be changed dramatically if you made them chocolate throughout with the powder.

There are plenty of recipes, like fudge or brownies that can both include chocolate and cocoa powder. These are obviously the easiest to alter.

I wouldn't worry about the butter. Butter does not behave at all like cocoa butter and so adding it would not make your cocoa powder behave correctly and would likely throw off your recipe.

It is easy to find recipes for assembling your own chocolate with cocoa powder and cocoa butter. Many recipes will play with the fat as well such as adding coconut oil. It seems most of these are geared towards a vegan or paleo audience who want more control of the chocolate they consume. I haven't tried these techniques but the reviews suggest that they might not be a complimentary use of your chocolate.