Question

what is the effect on power factor on the readings of two wattmeters

Answer 1

Yes. When the load operates at a power factor other than unity, there will be greater losses in the distribution system conductors due to |I|2R|I|2R for each phase. Since the magnitude of the current is greater when the power factor is less than unity, the distribution system losses will be greater. The watt-hout meter will register those losses which are down stream of the meter.