1) You can put in larger clutch, but get re-surfaced flywheel as stated.
3) I'm looking into this too, as I just fried my clutch in my SJ410. I've found ZERO complaints about petroworks, and ALL KINDS of accolades about it. If you can afford it, and do a lot of wheeling, it looks like it's and extra $100 well spent.
That said, I've also heard a petroworks is not needed when gearing down. Are you going kicker 3 in a 2 door kick? It makes me nervous doing it into a 4-door, but I'm looking into it.