[@WriterRaven]
1. You may have any one basic stage non-mythical, non-legendary Pokemon. Level doesn't play a part in this RP as it may in other RPs. It matters in the skill of the writing. If the writer can make a good enough strategy, and bring the piece of writing to life with detail and description, a pidgey can beat a kirlia.
1a. Gaining levels like I stated isn't really a mechanic in this RP. Evolutions will be based on how many battles/trials/contests a Pokemon has been in. I really don't like levels in RPs, as I'd rather lose in a fair match, than win by hidden numbers. With friendship based evolutions, well... Start friending xD
1b. I haven't decided on egg moves yet, but for now my answer leans towards yes, writhing reason.
1c. I'm fine with hidden abilities, just... I don't want a completely stacked team.

2. I tried a list in past games, and it just didn't work out well. You can encounter anything within reason.
2a/3. I chose to put these together as they go hand in hand. After you go through the 'tutorial' of the RP, you will be given 5 pokeballs, 10 potions, 3 revives, 1 of each of the basic status healing items. Everytime you get to a new town they will refresh. As you get into later towns not only do they refresh, but they get an upgrade (ex. Pokeball into great ball) and you will be able to carry more of that item. You can catch as many Pokemon as you have pokeballs for, and yes, if you save the pokeballs they will carry over after the refresh, but they will not get an upgrade of one is given.

[@Vulkan] Of course ^^

[@Pathfinder] You can find information about levels in the above text.

Thanks to insightful questions, I'm now adding more into the OOC/Information.