1. You do qualifying as usual and start the race in the grid position for which you qualified. At the start, you slowly get of the line and get behind the person in front of you.
2. We've been doing it in second gear, that seemed to be the most adequate speed after a few tests. Of course there's nothing preventing you from shifting into whatever gear you want, but for safety reasons it's good to stay in second so your speed is limited.
3. We haven't had any crashes while testing. But (IMO) if someone crashes themselves in second gear they deserve it and the race should go on. But if some innocent gets crashed into it's another story, not sure what should be done then. That's why staying in second is crucial - if you're keeping a reasonable distance from the person in from the person in front of you it's almost impossible to crash into him, since there's no braking required for any of the corners.
The good thing about rolling starts is it spreads out the racers - in a standing start you're more bunched up, someone does a better start, someone does a worse one, and it's not uncommon to have 3 or 4 cars abreast heading into the first corner. With a rolling start, you shouldn't have more than 2 cars side by side going into the corner, depending on the distance from the starting line to the corner. That's the theory anyway.