Direct answers to your questions:
1) Yes, the transmission fluid should be drained completely (really just below axle level), otherwise it will spill out of the hole in which the axle normally fits in.
2) Yes. They would collect it in a pan and, in your case since you declined new fluid, re-fill it. In your case it's a no-brainer to change the fluid, but why not just buy it yourself and have them re-fill with your stuff instead of theirs?
3) No. It should either be 1 plug (like you would see with an oil pan), or they have to drop the pan itself if there is no drain plug (messy job. Ask me how I know)
4) Check the dipstick. If it's bright red, it's likely new fluid.
I hope that helps.