I use to straddle the front wheel as I tightened quill stems. Every now and then as I tightened it I would hold the front wheel from moving with my legs and try turn the bars. If they moved the stem in the steerer tube, then I'd tighten the bolt some more till turning the bars wouldn't let the quill stem twist askew.
I think the big concern with over tightening the quill is that it will bulge the steerer tube. And that would be doubly bad if the quill was in the area of the top headset bearing. Which it shouldn't be if you don't go beyond max extension line from showing on the stem.
4) Whether the quill stem or the threadless stem adapter, how far down can I push the stem into the headset/head tube before tightening it? I know there is a minimal insertion limit but is there a maximum?
I think you can push it as far as you can. You'll probably hit the brake bolt before you got it too low to damage the bottom bearing. And that would only be if you had a obscenely tall stem that could make it to the bottom of the headtube/steerer tube.
I'd favor getting that threadless adapter. I used one with my '91 Paramount. It was much easier to change the pista type stems when I wanted to try out different length of reach to the bars/hoods. Didn't have to unwrap the bars and remove the STI's.