I haven't missed anything, as you say,
'it is a guide" just adding more refinement.
Can you tackle 5 ft high grass or brush with 16 hp? Same cutter with 30-50 hp is no problem.
This is the stuff that makes for horse races.
When I first mowed the right of way (with the 60" cutter and 16.5 PTO HP), most of the brush was as tall as the cowl (about 48", I'd guess) and some as tall as the ROPS. Slow going (which since I didn't know what was under the brush, slow going was the rule anyway...even if I had been running a bigger tractor), but the tractor/cutter did fine. There was an occasional bogging, but not too much of that. It actually surprised me how well it did.
BTW, Land Pride's recommendation for the cutter was 20 PTO HP, minimum. By Land Pride's requirements, that's 4 PTO HP per foot of width (for a standard duty cutter...I don't think Land Pride manufactures light duty equipment).
So, in answer to your question "Can you tackle 5 ft high grass or brush with 16 hp?", the answer is "I did" (others might not have done as well, or may do better).
As far as the HP calculation....PTO HP is measured (or calculated) at PTO speed. I'm not sure how you came up with 65-80% since that HP curve is quite dependent upon a number of variables (cam profile being a biggie).
That old 670 (tractor described in my posts) developed 19 gross engine HP, 16.5 at the PTO. That's about 87%. My 4400 develops 35 Engine HP, 30 PTO HP...that comes to about 86%. I'm rounding the percentages, of course.
I'm not even sure where you came up with "Applying the 5 Hp/ ft rule is based on the full power developed". Never read that that "rule" other then as a subjective comment or guideline on TBN.
As far as "Question; how much can a FEL lift if the lifting force is 3,500 lb at the end of the lift arm?"...can't help you there. My engineering books are at work and my math is too rusty any more.