Regarding #2, my experience is:
... if you are using historical transactions (which you are
probably not if you are integrating earlier), then...
a) ... even if you uncheck Miss Seasons According to History, military guys like Ted Williams, Curt Simmons, etc., will still miss those seasons (they will be "loaned" to a "team" called "military" and will later be "returned" to their team). You would need to manually reassign Williams, for example, back to the Red Sox for the 1943 season. And at that point, the OOTP development engine will take over if you have Development on. If you have development off, then Teddy will be rated as he was for the 1942 season and will stay that way until new ratings are based upon his next set of real-life stats - from the 1946 season.
b) ... even if you uncheck Retire According to History, a guy like Koufax will still retire at the end of the 1966 season. You would need to manually unretire him and place on the Dodgers each season, for as long as you want him to remain active. And just like with Teddy Ballgame, Koufax would be rated as per his 1966 stats, in perpetuity (unless of course you edit them).
c) ... a guy like Gehrig would either a) retire after the 1938 season since he was 38 years old and barely had any stats the following year, or b) would end up on the reserve roster or in the minors, or maybe be released for the 1939 season - and then defintely retire (as per the historical txns file) after the '39 season. However, if you have 3-year recalc in play (as Brad K would), he might stick around for the 1939 season (perhaps even another year), as a decent player; but then he would retire (as per hist txns file)... And/or, if you have Development on, he also might stick around, or could retire sooner than he did in real life. But he will surely retire no later than the end of the '39 season. You would need to manually unretire him to prolong his career, but he would be a terrible player (based upon his paltry real-life '39 stats) unless you manually edited his stats/ratings or had development on (and development is no guarantee to improve his ratings; they could go either way).
Now, you are
not using historical transactions...
a) ... if you uncheck Miss Seasons According to History, Williams, Simmons, etc., will remain active and the OOTP development engine will take over for any seasons they missed, influenced of course by your development settings. But OOTP development WILL occur with them, even if you have Development off.
b) ... if you uncheck Retire According to History, Koufax will not retire at the end of the 1966 season. Well, technically he could, but he would be more-likely to pitch for at least a few years until he reaches a more-typical retirement age. As for his post-1966 development, it will occur as noted above for Williams, Simmons...
c) ... Gehrig would not necessarily retire after the 1939 season, but that - and his 1939 OOTP ratings (if he remained active) would depend upon your recalc and development settings.
Where the 3-year (or 5-year) recalc - as opposed to 1-year - is going to help you is where a player had either a horrible year or had one with very few at bats or innings pitched. In either case, with a 1-year recalc he is going to be rated poorly. But with a 3-year recalc (probably better than the 5-year, but YMMV), these sub-par seasons will be
smoothed over... An example here is Bill Buckner: He was a very consistent & solid player throughout his career - with the exception of an injury-filled 1975 season. With 3-year recalc, you'll barely - if at all - notice in OOTP that his 1975 was, statistically, sub-par in real-life.
The wild card here, though, is your development settings. It's on a 0 (off ) to 200 (max) scale. If you were to have development settings set to 200, all sorts of wild things could happen. With recalc, any player could unexpectedly tank or take off, or develop (or lose) power or stamina, but by the time the next season rolls around, recalc will bring his settings back to where they should be. With development set to 200 and recalc off, not only could the above happen, but it could affect an entire career. Gehrig, for example, could turn into a singles hitter and then flame out before his 30th birthday. Buckner might develop into a 40-HR guy. Kerry Dineen could turn into a hall-of-famer.
You want Mantle, Williams, Gehrig to "become the stars that they were" in real life. Therefore, you're going to want recalc on, and you're either going to want development off or have it set somewhat low, maybe 50 or 75. That's a number you might want to experiment with, though, in order to accomplish that but also "see a random player every so often that either had an injury or couldn't amount to much in the big leagues become stars."
My advice is to start a test league and don't invest time in setting up logos and such. Just set it up and let it run, and then see if the results are to your liking. Then, if not, tweak settings and re-test.
Good luck!
EDIT: I just read #3 in your OP. Based upon that you will obviously not be using historical txns. I'll leave all of that first part for reference though... The short version is do what Brad K suggested

But you might also want to turn off Retire Accdg to History.