1. Go straight from UC8bit to FLV
2. It depends on what you're compressing to. You'll get great quality and smaller file size going with H.264 rather than ON2VP6. You can now put H.264 in a Flash wrapper for viewers with Flash9 Update3 or later to view. For ON2VP6 FLVs, Episode, FlixPro: http://www.on2.com/index.php?365, Squeeze, or the Flash Encoder work. I think all but the Flash Encoder do 2 pass encoding for the highest quality (but be aware that some Flash upload sites don't allow 2 pass VBR Flash). If you can go H.264, then Compressor, Episode, QT Pro, and Squeeze all work. I personally use and like Episode, although I use Compressor for H.264 too.
3. Video for encoding likes to be in blocks of 8 or 16 pixels ideally. Here's an Adobe chart for Flash optimal sizes. Your frame size isn't here, but do the math, I think you'll see that your size isn't ideal. Maybe you can crop a few pixels?
Ended up going to a post house last night and they compressed it with squeeze and it looks pretty good. Very interesting about the H.264 wrapper and the frame size recommendations. I am definitely going to give it another go myself with both of those options. Thanks for your time and consideration on this subject.