Hi Activguy, Welcome along...... A small suggestion .... add a little more material to the front of the template to make it rounded [curved] ..this will bring the front edge closer to the bit of hair you`re intending to keep...as it is, it`s a bit too much of a straight line..it`ll look more natural.

In answer to your questions:
[1] Yes --just specify finer-diameter hair.
[2]Density refers to the number of hairs on an area, not the diameter of individual hairs.
The hair -length doesn`t really affect ` density` as such....yes it looks ` thick` when it arrives to you, but much of it is cut off /end up on a salon floor at the cut-in! [which is why I never order mine longer than 4 inches---makes for less work /effort/time for both the stylist and me at the cut-in stage !! ]
[3] I`d simply go with lace for now .....guys pepper a lot over knots -visibility ....the factory generally does a good job of bleaching /making them invisible at the more ` exposed` areas such as the front hairline..... I`ve just received two new systems and I`m very impressed with the knots...totally invisible ! I wear French lace....it`s marginally ` heavier` than Swiss, but for an active lifestyle, it`s that bit more robust in wear....... see how you get on with your first system and you can try out the Ilace system on your next order..... your main issue will be finding the best adhesive / tape for your situation, not the type of base -material you wear as such.
[4] The gray hair is synthetic so as not to absorb colour if /when you need or want to colour your system ......2% gray is very low --- you`ll hardly see it ---- I ordered 10% on these new systems and it`s hardly noticeable !! I suggest 5% and see how you like it.
Your first ever system is always a starting-point......there will inevitably be aspects you`ll want to adjust /tweak on subsequent orders....... John will be happy to work with you in terms of getting the correct matching-densities on your system ..just send him photos of your existing hair /thin areas and he`ll know what to order for you .... best wishes with it all !