Question 1: C
Question 2: A
Although I agree that there should be a difference between annual contest and open contest, I don't think 5-year hole is a good solution. Why not simply have annual contest for new songs and open contest for all other songs? For example this year we had annual contest for songs published after 1st January 2015 while in open contest we have songs published before that date.
Imagine that an user really likes one song from 2014, but he/she can't enter it because of this rule and they have to wait for 3 years to do that. Where are we going to be in 3 years... Anyway, seems fair that songs from every year should be allowed to enter in one TISC season.
As for question 2, although I would like to host it I think winners should have priority.