Yeah that or a 70 would probably be good.
That is more of a ‘rule of thumb’ and definitely not a rule.
Also personal preference. 120ish is usually considered a “shallow drop” but is totally up to you really.
It’s worth noting that as you go narrower you effectively shorten the reach by a bit. So make sure you’re not changing so many things without considering them and go too far in the other direction.
No, that would be more about where you place your hoods on the front of the drops and maybe the shape of the drops.
Also could be where you put your hands on the drops. But if you have your hands up into the bends of the drop and still can’t reach, then you could try rotating your hoods down a hair. And if they’re still too far away after you’ve moved your reach adjust all the way them then consider getting new hoods. I know Shimano Ultegra R8000 has a version of hoods for smaller hands.