An input from me that may help (experience with around about 65 + Dynon installs) --
1. Absolutely correct.
2. Maybe happens but not likely due to wire colours - most people understand that red goes to red & yellow to yellow etc.
3. an important difference here - IMO it's not the 25 pin connector itself that's the problem, the thermocouple wires being stiffer than standard tefzel wiring. Bear with me on this - when you bend the EGT/CHT wiring loom, especially close to the 25 way connector, the pins themselves move in & out (like pistons) in the connector, you can see that happening if you look at the pins while bending the loom.
My solution is to remove the backshell & heatshrink, bend the wires individually (strain relieving them) so that there is no tension in the loom or backshell & then reassemble the backshell. After doing that any 'bad' readings will be due to a cause at the engine end.
4. MOST of the time the junction between the supplied loom & the probe connectors is the cause of the problem (BTW -85 to -99 usually means a disconnect of some type) -maybe failure of the probe but rarely in my experience. I'm referencing the later supplied EGT probes here as they are multi conductor wire type as distinct from the earlier single conductor ones. There are different types of connectors to use, some including specifically designed for thermocouples, your choice what type to use however I've stayed with the push on blade type as it allows use of the existing female connector on the supplied probes. I actually throw away the supplied pink coloured supplied ones & use the red AMP manufactured push on spades ( usually at no charge to my customer) as I find them to be really reliable (must use a 2 jawed crimper, not the cheap automotive type), YMMV.
5. As Dynon says - possible. I try & install the sensors at least 2.5" - 3" below the cyl head flange to improve the longevity of the EGT probes, having said that I've only had to replace 5 probes now & 2 of those were because they were bent too much to get some clearance needed for access.
Footnote : having all the connections line up in one group makes it easier to swap connections with troubleshooting, eg 1 & 3 or 2 & 4 can be swapped that way without have to undo cable ties etc.
HTH