1. Correct. You will get both defiant avengers and implacable march. "The only change is that you won’t be able to stack the allegiance abilities from Firestorm with any others apart from the Grand Allegiance abilities." Meaning you both. See: https://www.warhammer-community.com/2017/10/06/firestorm-matched-play-rules-update/
2. Deciding on the trait is up to you, only roll if you can't decide. Other than that correct.
4. I'm assuming you're referencing the command trait? If so, it is in addition to the command ability, they are entirely separate and command traits always have effect, a command ability is chosen in the hero phase, and your general can use only one (unless affected by something like strategic genius). You can always use inspiring presence instead of the command trait on the warscroll, and can use both in a game, just not in the same turn (unless affected by something like strategic genius). Yes, you could use both with Strategic Genius, but don't forget that you have to roll, and it's only a 1/3 chance. I would take something more reliable, and assuming your general is the Dragonlord, Master of Defense and Tenacious are good defensively and Legendary Fighter and Reckless are good offensively. The Drakespawn Knights have good bravery so battleshock shouldn't be a big worry.
Scenery wise, rolling is optional. It is random, but can result in a rather barren or overflowing board. I would personally suggest you set up whatever looks cool, both armies are melee focused so you won't be giving either side a huge advantage, just is the Slaves to Darkness army has big units don't add too much. Use the mystical terrain rules and GW terrain if available, it helps spice up the game. As far as objectives, I wouldn't bother, it'll be easier to just kill each other's armies and since you're both more melee focused there shouldn't be any risk of one player camping with guns. If you really want one, go for a battle plan with easy set up, set up 2 objectives in the middle and like 12 inches apart, or maybe even try a narrative one, they aren't super balanced but they can be fun.
Good luck with the game. If you have any more questions, just ask.