I've used milk jugs for mudflaps for years too.

I used to attach them with a small nut and bolt onto the SKS plastic/Al laminate. On the last few I discovered spray adhesive (or contact cement) works as well or even better. I spray paint mine black to match the fender.

My panniers are water-resistant. I use 30gal kitchen trash bags (occasionally trash compactor bags - they cost more) and Ziplocks to waterproof and organize gear. It's a simple idea that evolved from my backpacking experience, except there I use a WP poncho with long tail to protect myself and pack, plus ziplocks.