1. If I stayed with a smaller case, could a 4U 104HP Intellijel Palette be a good choice? It seems to have a lot of utility built into it (sums, mults, MIDI, 1/4" outputs), and also has the 1U row for more. This seems like it would leave me enough open space for expansion in the 3U row?

For MIDI and OUTPUT these are expansion jacks, you still need to buy the 1U module.