As to #1, I generally allow each team 32-man rosters: I go with 14 pitchers, two guys at every position, plus a third catcher and a DH/pinch hitter. I adopted this setup as a way of coping with DMB's lack of an auto-GM, but I've found I just like that roster size in my projects. It's big enough that I never have to worry about injuries and always have a ready sub, but not so big that players get lost in the shuffle.

For #2, I'll be curious to hear other people's answers. I've never quite figured out the appropriate way to handle a solo expansion draft myself...