1) which implies that the damage of the feat replaces regular damage
2) which speaks of "bonus increases" to the damage and hence implies these are added to the regular damageYou unleash a hail of attacks imbued with elemental damage in a 40' circle, dealing 2d8 of piercing damage + 5d6 of your chosen element if you succeed with a ranged touch attack. You can affect up to 5 targets. With the improved elemental storm feat, the damage increases to 2d8 + (HD/2)d6. i.e. A number of d6 rolls equal to half your current hit dice which maxes out at 15d6.
The elemental storm becomes a raging conflagration of energy. The
damage bonus increases to the damage is 2d8 + (HD/2)d6 and the number of targets increases to 10.