I'm no expert and these are just my opinions
Question 1: I used the power steering fluid that's recommended for the pump and I haven't had any issues. The problem I had was with pressure. The GM pump flows too much for the Ford rack. First I installed the Borgeson kit
https://www.borgeson.com/xcart/home.php?cat=133
Then I tried a flow reducer like this:
https://www.ebay.com/i/282971970150?...xoCGC4QAvD_BwE
I think the flow reducer helped more than the pressure reducer but I have seen other people that were happy with the Borgeson.
Question 2: A 3/4" shaft is plenty big. I would say use the slip style shaft if you're able to fit it. I had to use 2 joints to make mine fit around the headers. Since it's 2 pieces I don't have the slip style.
Question 3 : I was also told to just use the green antifreeze by my radiator supplier for the same reason you mentioned.