I can only assume that they are paint drips. It is my contention that the block of stone was daubed with the inscription at the quarry and, as the person responsible did so, the paint dripped from his "brush" (if one may call it that.)
That Vyse, Perring and Hill assumed the dots had meaning is because the drips were INSIDE the cartouche.
By way of illustration, why did Hill not copy onto his facsimile drawings all the drips OUTSIDE of the cartouche? Because he assume them to be drips and to have no meaning, perhaps?
It is easy for us to forget that these antiquarians were not hieroglyph scholars, nor did they have access to various other KHWFW inscriptions for the purpose of comparison at the time of their transcription into Vyse's journal or subsequent illustrations in his publications.
Here is the type of paint "brush" available to a mason in Ancient Egypt: reed fibres held together by bitumen at one end (see the top 'brush'). It's the kind of brush which is likely to drip given the materials used, don't you think?