After thinking about it, I've started looking at this from a different angle. Considering the cup is a holy vessel, I seriously doubt Waite would've put his initial on it. When you look at pictures of old Eucharist vessels they're often decorated with religious symbols, pictures of saints, etc.
So if it doesn't stand for Waite, what is it? The sacrament of the Eucharist has three critical elements, 1) the wafer; 2) the wine; 3) the sacred words of consecration. The words are the blessing the priest pronounces over the elements that mystically transforms them. It comes from the Last Supper in the New Testament where Christ supposedly pronounced the original blessing over the elements. However, what the words are is a bit of a mystery since they aren't recorded.
In
The Hidden Church, Waite goes into this at some length. The "Secret Words" are essential for the healing powers of the Grail to work.
So in the Ace of Cups we can now see all three elements represented, "W" symbolizing the secrets words of consecration. I believe he instructed Pamela to use an upside-down M as a way of illustrating the mysterious or secret nature of the words. Or Pamela may have taken it upon herself to do it, but it seems more likely to me it was Waite.
I could be wrong, but one thing I feel confident of is the "W" doesn't stand for Waite, so I'm rethinking the whole thing. If the "W" doesn't represent Word or Words, I'm not sure what it could be.