Per the rules on page 7, Formed units may pass though other formed units as long as they both make a standard Morale test. Both units would make Morale tests to check to see if they can interpenetrate. Thus, I would guess correct for your second answer. The rules do not specify the type of cover provided by breastworks. I assume fortifications like Ticonderoga would be hard cover and a simple rail fence is soft.
All breastworks are hard.
Rail fences are soft. Yes, although it doesn t mean everyone s dead. It just means that the unit is no longer combat effective. I think that the 40mm x 40mm are more readily available. Artillery and command stands should be 40mm bases.