Nitrobuggies,
Some answers to your questions:
1. See post #1 on this thread (yes they are allowed)
2. I was asked this same question yesterday. I'll have to chase an answer from Bob.
Body type: the Mazdaspeed 6 is the popular choice
Mod motor: go for all the horsepower you can get, a 3.5 is probably the way to go for 1:10. 1:12 unknown to me.