Questions 1,2,3 - OK, the switch on your bike is junk. Do you want it to work like "new" and is that worth $120.00 to you? If so, the new correct switch is the only answer: I would check a few other sources before going to CMSNL - they have an amazing parts selection but rather high prices.
Getting a used switch unit off ebay or a junker will usually get you problems. Another 30+ year old one will have the typical brittle plastic parts and stiff wires.
You can fit a small SPST momentary push button switch in the housing using the original start switch mounting hole. This gives you electric start at least. If you really want the other switch functions to work they can be "McGyver'ed" in as well.
Question 4 - This is normal. You can try and organize the rat's nest a bit but there are a lot of wires in there.
Question 5 - Single filament bulbs are used in the stock rear indicators which are only used as turn signals. Dual filament bulbs are used in the front indicators which are both marker lights and turn signals - dual filament means there are 2 "lamps" in one bulb, a lowish power one for the marker light and a higher power one for the turn signal function. You can tell which one is which by looking in the light bulb, the 2 filaments are easy to see on a clear bulb (harder with coloured bulbs). Honda uses single filament bulbs with one contact on the base and dual filament bulbs with 2 contacts on the base - both use the outer metal shell as the electrical ground contact. Also, single filament bases have 2 index pins at the same height, dual filament have the lins at staggered heights so you can't easily put the a single filament bulb in a dual socket or vice versa. There are single filament bulbs with 2 contacts as well, they do not use the outer shell as an electrical contact. These are uncommon in automotive use.
Tail/stop lights generally use the dual filament bulbs. Low power for tail, high for stop.
The wires - usually the sockets in motorcycle tail/stop lamps and signal lamps are rubber mounted to dampen vibration (so the lamps last longer). This insulates the socket from the frame ground so one of the 3 wires is the shell ground connection. The other 2 wires go to the 2 contacts for a dual filament bulb. If you want to use that for a rear turn signal you can just ignore the low-power filament wire and connect the same 2 harness wires. Some SOHC4 models have the rear marker light wires available in the harness but left unused... so you could have rear markers too but generally this is only legal with red lights at the rear of a vehicle.
Aftermarket signal light units usually have a green wire for ground but no standard for the power wire colours, so you have to experiment to figure out the wiring.
The bike wiring is all in your owner's manual wiring diagram.
Opinion question - Whatever you like is perfect for your bike!
