1) You can either add the lactose during the boil as mentioned, or you can boil it seperately in a pint or two of water, and add until it tastes "right" to you. Yooper is referring to the second method.
(1b. If you are sensitive to lactose at all, you might want to err on the light side. Excessive lactose consumption in sensitive G.I. systems can cause the bad-news browns.)
2. Yooper is referring to the taste itself - way too much sugar and vanilla taste. There isn't actually extra sugar added in, except for the lactose itself (backsweetener) and whatever trace amounts might be in the vanilla extract.
Excluding the Lactose, it's all malt-based sweetness.
I might try to come up with my own
Caramel Vanilla sometime this winter. As I said prior, this recipe just kind of fell flat in my tastes and in my opinion. I've always wanted to one-up it - you know, for the challenge of "Can I make this better?", the personal challenge of "Can I replicate these tastes?".
One thing's for sure. My recipe probably wouldn't wind up having an extract version - a minimash maybe would work - Cuz it would be loaded to the hilt with a bajillion different specialty grains to build complexity.
To answer your original question, from what you said was available, I would do 0.5 oz Vanguard at 60 minutes, and that's all.