1. Not necessarily. Conversion is done when it is done. It could happen in 10 minutes (and most of it usually does), but leaving it longer will help to ENSURE that conversion is complete. Those little enzymes are kinda sketchy...I don't trust 'em.
2. It's not better conversion you're getting at that point, it's better extraction. Basically, after the conversion takes place, the grains need to be rinsed or the sugars you converted will just cling to the grain.
2b. I use about 1.4-1.5qt/lb. It does help to have more water, but there is a breaking point. I definitely wouldn't go above 2qt/lb for your mash, because the water/grain ratio is very important for conversion. It's not as important for extraction (except that if you get far too much water, you could extract tannins, but that's not really a concern with this method.)
One trick I've learned is, if you have a colander, you can give the grains a quick rinse with some of the sparge water over the mash pot...and then put them in the sparge. This rinses off some of the sugars into the mash pot and doesn't leave them clinging when they go in the sparge. Some people do ONLY a pour-over sparge and it can work fairly well. I find the combination gets the best efficiency.