DC circuit breakers are required to interrupt dc faults in multi-terminal HVDC (MTDC) grids. Consequently, their current limiting inductors can substantially impact the dynamic performance and stability of MTDC grids. However, the literature does not address the assessment and mitigation of dc breaker inductance impacts on the stability of an MTDC grid equipped with a power flow controller (PFC). To fill in this gap, this paper evaluates the effects of dc breaker inductance on the stability of a PFC-equipped MTDC grid. Furthermore, the paper expands the capability of the PFC via the development of a PFC-based damping controller to improve the dynamic performance of the MTDC grid and enhance its damping. First, a comprehensive small-signal model of the PFC-equipped MTDC grid is developed. Then, eigenvalue and frequency response analyses are employed to assess the dynamic performance and stability of the MTDC grid, considering the effects of breakers inductances, PFC and converter station control parameters, and network parameter uncertainty. Finally, time-domain simulations and hardware-inthe-loop real-time simulations are carried out to evaluate the performance of the proposed damping controller and verify the theoretical analysis.