1. That's about right. You could consider enlarging the lugholes, but the 1601 is notoriously difficult to drill. There's not a lot of metal to work with on those skinny lugs.
2. As ogladio pointed out, you'll be fine.
3. The dial will fit on the movement, but not in the case. Yuki sells several 5500 Explorer dials, if you want to go in that route.
Interestingly, genuine 5500 Explorer dials are hardly ever listed for sale. There's a guy on VRM who wants EUR 1000 for a gilt.