Great job! I did the same pattern a few weeks ago...
http://www.quiltingboard.com/t-57034-1.htm
I just resize patterns I already have. I try to stick with patterns that don't require sew two or more entire sections together....otherwise I just reduce the size of any pattern that appeals to me.
Yes getting the paper off is tricky. Sometimes I back stitch over the line where their are small sections and find that it is much easier to get the paper off. Otherwise use tweesers and be very careful. I also found it helpful to wait until the entire piece is finished....border and all before removing the paper.
Yes always 1/4" seam allowance for me.
Hummmm, I'm not sure how I handle seams, it might be that I use an older all metal machine and it is a workhorse and somehow it just goes through.
I use fabrics that I would use on large pieces. I go with whatever excites me. But yes I do think contrasting colors definitely show off the tiny work more clearly! I love pping! Glad you decided to try it and like it!!!!!