Power up this poliwrath?

Poli is a better defender than attacker, but that moveset is probably the best for attacking, imo. Poliwrath's typing and that moveset in particular will be very useful in Gen 2 as he is probably the best counter to Tyranitar, which should be top tier in Gen 2.

Honestly though, since dust is so scarce and candy might be as well, I'd wait for a Bubble/something and power that up first. Vaporeon is a better water attacker.

No. Save your candy and stardust for a Poliwrath with Bubble. There are better water attackers available with Water Gun+Hydro Pump. The thing that make Poliwrath special is that Bubble on defense deals a lot of damage and has an awkward dodge rhythm.

I used a Poliwrath with mudshot/hydro as one of main attackers for several levels and it did a very decent job, but now I've got more choice I rarely use it. Vaperons do the job more speedily, and Slowbros generally work better too.

What level are you?

If you live near water, Poliwags are everywhere. Once you get to Level 30, you will be able to catch Level 30 Poliwags and evolve them into Poliwraths and save your stardust.