Sounds like a really fun tank shape, was it a frag rack at one time?
I'll try to help with your questions in order
1) I would do something with an island, whether manzanita or not. Iwagumi can be stunningly pretty but I've been growing less fond of them lately, they just aren't realistic for most fish's habitats.
2) It seems that most planted tank keepers cover their sump and overflows, possibly you could use a bean animal overflow that keeps the main intake submerged at all times?
Or just crank the CO2, it's reasonably cheap
3) Test your Old Milwaukee (yeah, I just went there...) and see if it still works. If it does and you trust it, why not use it. Most serious CO2 users suggest using a quality dual stage regulator and either buying a post body kit from another hobbiest or piecing one together yourself. I think the hot ticket lately is second-hand high end stainless dual stage regulator with an Ideal needle valve #52-1-12 and whatever brand of bubble counter you like best.
I put something together for about $45 with a single stage welding regulator I got (stole) for free from my brother's garage and some parts from local industrial supply shops and it works like a treat.
4) I can't go into too much depth here as I'm running store bought LEDs myself but it seems to me that DIY LED is a LOT of work, involving skills and time that most people don't have and it's really not that much cheaper when you can just go buy something like the Ray 2.
I know that the lighting requirements for reef keeping are MUCH higher and more demanding so I think that the DIY stuff is much much more popular because it boils down to spending $200 on parts and a weekend or two in the garage or throwing $600+ down on your local retailers counter for a single Radion.
Basically, we don't really need to DIY to get effective lighting when you can do it for under $150 with a warranted store bought light.
That's just my thoughts on the matter however, I'm sure that others who are more disagreeable will disagree with me lol