First Answer: Yes, you would be correct in assuming that. However, if someone decides to make Snow White (or another character directly involved with Snow White's Father) their PC, there is a chance that they could change the backstory and say otherwise. It depends on the player and how they want to play out their version of a character and their backstory. 

Second Answer: You guys are starting at level 1 because your characters will just be starting out and meeting each other for the first time. The only story they've experienced is their own story thus far. I think I may have inadvertently caused some confusion in my last post, and I apologize for that. The PC's will be getting involved in other stories during the campaign.