Yes, a combination of both soft and hard cat food is very healthy for your cat. Water is the most important of all 6 nutrients contained in a healthy diet.
As for your cats food allergy.
Taken from the book "Caring for you sick cat"
Written By: Carol Himsel Daly, DVM
"Adverse reactions to foods can be caused by any substance in that food, whether it is a major ingredient such as beef, eggs, or soy, or a minor one such as dairy products, preservatives, dyes, or "fillers."
Food allergies manifest themselves in one of two ways. They either cause skin problems, with severe itching, redness, sores and hair loss around the face and sometimes body, or gastroenteritis with vomiting and/or diarrhea."
So basically, trial and error are you best efforts to get your cat a food that he/she will like and can tolerate. You can ask your vet about "Home-Cooked Diets" and see if that may help eliminate whatever it is that is causing this problem.
There are also some anti-inflammatory drugs and medications to supress the immune response probably worth looking into.
Hope this helps.