Alright, i did pretty much the same thing as you did, so i'll try and answer your questions. 1. That looks like it was grain filled with black epoxy, so yes, you will need to do the black - sand back technique. 2. Stain before the burst, then seal it, then do the burst. 3. Leave the cutout the exact shape of the guitar, just adjust the angle of spray, near virticle = narrow burst, lower angle = wider burst. I sujest practising bursting on some newspaper with the template on it first, to find out what angle suits you.
Good luck!