1.) for the most part I believe an applicant letter is optional, unless you have things you need to clarify/explain. I wrote a quick one explaining my relationship with my husband, a few corrections/missing things on my online form, and when I was thinking of traveling.
2.) like I said in the other thread, I'm not 100% sure about any rule of color vs black and white photocopies, so maybe someone can explain that if there's a rule that exists but I don't know about.
3.) I wouldn't sweat the photos that much if it was done at a store like CVS--mine were done at Walgreens, and I only got one, and it was a US sized photo. They should of printed it to conform with US passport specifications as long as that's what you asked for, and the UKBA will tinker with it in order to get it down to what they need. It doesn't matter if you printed them off yourself anyway, as long as it conforms to certain standards and clearly shows your face, and resembles the photo in your passport so that everything matches up.