1: It is recommended to use the correct models where possible or do some conversion to make it more obvious. As long as you don't have Galadhrim as Galadhrim and Galadhrim as High Elves, then you shall be fine
2: Unfortunately, yes. Having said that, there are 3 companies of each weapon type instantly. The only boxes that allow customisation are the SwanKnights of Dol Amroth and Morgul Knghts (both of whom have command options, essentially) and, to a lesser extent, Galadhrim Knights (4 have swords, 2 have bows, one of the sword guys may be a banner bearer and you can give shields to whichever ones and can glue loose bows onto the sword guys).
3: For proper games of WotR, nothing less than 1,000 points because otherwise "armies" and units shall be too small. However, as a trial to test if you like the game, 500 points is fine. I did a trial to help my girlfriend and I learn the rules (using Wood Elves and Dwarves respectively) at 250 points as well as 500 points and 750 points, so it's playable, but best in larger numbers.
As to the list: If you're using Galadhrim models for High Elves, it will visually work and you can always say that they are elite Galadhrim, hence the better stats etc... The first thing though: drop the horn blower. They aren't worth the points. 5 points would be pushing it. If need be, replace the hornblower and banner bearer with a captain. The list actually looks okay to me though
A couple of notes:
*Galadhrim box gives you 8 with bow, 8 with shield and 8 with glaive. These would work out as 3 different formations (Archer formation, Warrior Formation and Warrior Formation with shield upgrade). However, fine to use when representing the High Elves.
*Warriors of the Last Alliance box gives you 8 Numenoreans (a fodder unit if you fancied one. Half the points with a decent defence. Adds bodies), 8 with longbow and 8 with glaive. You'd likely be doing a lot of trading off and you still wouldn't have the shield armed warriors: however, you can greenstuff mould the Galadhrim shield and attach them to whichever models you'd like to.
Hope that helps!
(P.S. If you'd like some plastic High Elves with bows or glaives, I have some for trade.)