I’d say you are in the right track. My family photo archive is more than 1TB and Nextcloud with Memories handles that just fine. Earlier this year I upgraded my home server from an i3-9100 CPU to a Xeon E-2236 (6 cores/ 12 threads compared to the old 2 cores/ 4 threads). That wasn’t strictly necessary, but it did increase the responsiveness of browsing Memories’ time line. Most of all, it increased the speed at which Recognize processed the images for face and object recognition.
One major thing to test, though, is the Nextcloud iOS client. I have one family member with an iPhone and ipad and the automatic upload only seems to work as long as the Nextcloud app is running in the foreground. Apparently Apple doesn’t allow “foreign” apps to run in the background.
Regarding your point 1 I have no solution. Regarding your point 2, you could just use a shared folder with permissions set correctly. But you could also have a look at the Group Folder functionality.
No, unfortunately not. For my own phone I simply clear unused/old photos every once in a while.