First question ... you can change the sequence settings, and accept the dialog about deleting previews. Much of the time that can work ok, if you've not done a lot of scaled cropping or effects timing things in/out of the screen such as graphic items. Even much of that typically makes it over.
So ... I'd suggest duplicating the sequence, and on a new timeline with that sequence, changing the sequence settings, see what happens.
Another way is to create a new 1080 sequence, go to "pancake" editing by dragging that sequence from the Project tab and instead of just dropping it into the timeline area with another sequence open, which would add it onto the end ... drag it to the top or bottom of the timeline panel so you get the blue border blocks showing and let go there, creating a second timeline panel. Select-all of the old sequence, then just drop it down onto the 1080 one.
Next question ... generally, yea, unless you're working with say 4k, 1080, and 480 material. That last is so small, you'd want to work on at least a 1280x720 if not 1920x1080 sequence, and maybe show the smaller media in a small box.
Neil