1: No. I don't think the damage limit was broken until FF VIII. In this game the max was 9999, and it couldnt be broken
2: N/A since the above answer is no. Im not sure how many it takes to max it out
3: To power up the DP the formula is Vincents Kills / 128. So you'll be looking for an area where you can encounter multiple enemies per battle. the Mithril Mine (the cave next to the swap where you can find Midgar Zolom) is good since you can get 5 enemies per battle IIRC.