Don't hurt the lizard to avoid the most egregious one. There are a couple more like the smiling man in the VN section or the nurse in the new dlc. There's one in the g end route and also one if you imprison a certain princess.
If you don't kill him, he invades you 3 times. Killing him in the prison drops a unique helmet and stops his invading. I'd recommend keeping him alive until you reach the ending just to experience the invasions, they are pretty unique.
1. Last time Toro talked about future projects, which was like a year ago, he said he wanted to do two side games, one featuring red hood and the other the demon princesses. After he finished dlc 3, he's been working on a touhou game so not actually sure if those other games are still a thing or when bs 3 might come along.
2. No idea, there's a lot of good info in this thread though if you can be bothered to read all those pages. The thread is a lot more active since the dlc came out so if you have any questions about the lore, asking here would be a good idea.
