Answer to question 1:
Personally, when I want to start a new world, I call on a group of players at Greater Immortal level, that play once in a while.
I pick one of them and I ask him/her to "build" a new "world" (according, more or less, to D&D Immortal rules): they can choose if the want the world flat or round, full or hollow, how many moons, heliocentric or not, mainly earth or mainly water/air/fire, how many planets, asteroids, planets with rings, etc. I encourage "creative" approaches.
That Immortal will be "the Creator" of that world, that is a nice title to have, but it can also costs a lot of "power" (i.e. XP) to build a nice new solar system with plenty of nice objects.
For a while I allow "the Creator" to develop the world almost as he likes (it's a bit like the early stages of Sim Earth) until sentient races are generated. At the beginning, all sentient beings worship only the Creator, that is the only Immortal of that solar system.
However, soon a number of other immortals "discover" that "cool new system" and fancies having worshippers there as well. In total I usually allow twelve immortals (just because several old religions, like Greek, mentioned 12 main gods), more or less equally divided between the various alignments (witha general higher power to Neutrality). Typically, I play the Neutral Immortals as NPCs and the PCs split between Order and Chaos (each with its own take on "order" and "Chaos" and aligned to the various "Spheres" as well).
I then let the players role play the situation as per Immortal rules (simplified and made faster), allowing at first greater power of direct intervention to the Immortals, that can raise new continents, races, civilizations, heroes and also act directly in first person or through avatars, while Neutral Immortals are usually more powerful but "lazy".
At some point there is usually a Chaos Gate directly in the new world, allowing free entry to demons and horrors, or we can have a Order Gate, allowing entry to angels with flaming swords and similar.
When one faction appears to be winning and defeating the other (whether it's Order or Chaos), then Neutrality comes into play with full strength and in a big stroke changes the balance (typically banning the demons (or angels, or both) in a parallel dimension from where they have minimal access to the world and closing the Gates.
Now it's more time for indirect control of the world, with schemes and heroes raised in order to re-open or keep closed the Gates, and with Empires of the World Order ruling the world, until again Neutral Immortals change the situation and barbarians invade the empire or the new Emperor turns out to be a bloodthirsty tyrant, or plague devastates all the lands, etc. etc.
Basically, I allow some titanic swings from Law to Chaos and then smaller and smaller (under Neutral Immortal supervision) until there are enough histories and legends (of course in line with the world creation and history) to generate a number of cultures and at least one sentient race (could be a mammalian race as well as amphibian or a bird race... like in Sim Earth! or it could be a world very simmilar to our, but in another timeframe...).
Then the twelve Greater Immortals (as usual...) lose interest in the toy and start looking at other, new worlds where they are allowed greater direct interaction, leaving the "old" toy to lesser immortals... and to the new first level players, that finally can start their campaign!!!
Of course, depending on the players' age and capability I'll put them in easier situations (younger players tend to understand better polarized worlds, with Good/Evil facing each other frontally, clear definition of good and evil creatures and lots of relatively easy fighting) or in more complex (more mature players tend to prefer complex plots with the various "Spheres" of power taking more importance than Order/Chaos polarization, where you never know where next betrayal will come from, where you fight seldom and when you fight you have always serious chances of dying, where there is not a right/wrong approach to things...). I also like to allow the players to develop a number of different characters in the same world, making them play a bit all the races and situations, just to have fun and experiment.
The creative interaction between the GM, the "Creator" and the Greater Immortal Players often generates interesting and funny world, then it will be your call to stop the development of previous civilizations, cultures, artifacts, archeology etc. and to start the proper campaign over that.
If you think about it, it is something that is done random by the computer at the beginning of every campaign of Dwarven Fortress, where even mythology and older civilizations are generated, as well as geographical features.
PS: it's fun ;-)