Without knowing what yeast you used, you're probably going to end up with a DRY mead. at 12# of honey in a 5 gallon must, you probably had an OG of around 1.086. Since it also looks like you didn't bother to take an OG (NOT a good idea IMO/IME, doubly so with mead) you'll never really know now.
As already mentioned, give your FG tests at least 1-2 weeks between them before calling it a final gravity. I'd even go a full month between if there was any doubt.
Depending on the yeast (really important to know what you're using here, since you get a LOT from the yeast with mead) you're probably at FG. Especially since you're looking at only about 11.5% with that amount of honey in 5 gallons. Was that your intent?
Since it IS a low ABV mead, and we don't know the yeast, you'll probably want to give it both more time, and stabilize it before you bottle it up. I would still give it the better part of a year before you stabilize and bottle though.
For oaking, American oak is stronger in flavor. Hungarian (which I use) is more subtle and easier to get what you want, IME. I would probably start with an ounce of American oak, give it a month or two, then taste to see what to do next. Keep in mind, chips are less stable (flavor wise) than cubes, staves, spirals, or honeycombs. They're also more one dimensional in flavor. With the others, you'll get a more complex oak/wood addition to the batch.
I typically toss my wood into the batch loose. This means the cubes will have more freedom to move about and have their character extracted over the time. They'll still settle to the bottom, so there's no worries there. I also don't bother to do anything with the oak in any fermentation over about 8%. There's a high enough ABV level there to take care of pretty much anything. Since I use pre-packaged oak, I'm not too concerned. IF I have any doubt about the safety level of the oak, I boil up some water in the tea kettle and pour enough over the cubes to cover. Then I seal that jar to let it steep. Once it's done to room temperature, I leave it closed up until it's time to pitch. Then everything goes into the batch. Keep in mind, you want to use as little water as possible and include it in the pitch. Otherwise, you're leaving too much of what the wood will give the batch behind.
Right now, I have three mead batches bulk aging. All of them were started in early December (2011). Two are formulated to 14% and have been racked twice so far. The third is formulated for about 21% and has only been racked once. It's been a few months since I racked the 14% batches, so I might do them again this weekend. This time, I will reserve samples for flavor and SG readings. Since I use a refractometer, that means small samplings.
I also move the mead (my beer too) via CO2 push. Which means far, far, far less chance of oxidization of the batches. I might rack the 21% batch in another month, or three. I plan on starting the flavor additions in that batch in the fall. It's going to be 18+ months in process before I even think about bottling it. The two 14% batches will be a minimum of 9-10 months, probably closer to 12, before I consider bottling them up. Even then, I'll have to taste them to see IF they're ready.
As for bottle aging, that's all well and good. Only issue I have is if it's not 100% ready for glass by then (good in it's own right) then I'm filling bottles with something that might never go to glass. IMO, that's a waste of more space than an aging vessel occupies. Since I ferment, and age, in stainless kegs, I don't worry about many things others do. I also have enough stainless kegs that I can let several batches age before I need to free one up (6 mead primaries, 3 beer primaries, 1 extra mead aging vessel, as well as two beer aging vessels).