Don't add back any high gravity wort to sparge with. Its not going to grab anymore sugars and if anything you may lose efficiency.
Also, you are correct in maintaining a 1-2" water level above the grain bed. If it gets too high you may compact the bed and cause channeling.
Lastly, you can sparge with cold water, it doesn't make any difference to the efficiency gained hot or cold surprisingly. I will use cold water for the last 5 gallon sparge, it extends the time to boil a little, but why waste all the heat on the spent grain? Plus I would have to use energy to heat the water in the first place.