A) Sidecar vs. database vs. DNG
I'm a fan of DNG, primarily because it avoids the sidecar/database issue and gives slightly smaller file sizes. But if you don't want DNG, I recommend sidecars. Actually, I recommend staying away from datebases whenever possible. Databases can become corrupt, and all your eggs are in one basket. Backup and sync issues can be a problem. A DNG file is standalone. You can move it anywhere and all settings go along with it.
That setting applies only to thumbnails and previews in Bridge. The actual image sharpening is contained in the sidecar/database/DNG. Bridge previews, with or without sharpening, look soft because Bridge sacrifices quality for speed. If you really want to check sharpness, you need to open iamges in ACR and view at 100%. I have my ACR prefs set to "all images" but I don't really see much difference, in speed or quality.
B) Cache Size
Personal preference. If you have disk to spare, crank it up, maybe 2-3 GB. But also consider using the Bridge Cache Preference to "Automatically export cache to folders." Now that will populate all you iamge folders with cache files, and in total they can take up quite a bit of space. But the benefit is that when you browse to an old folder whose data has been purged from the main cache, Bridge will copy the data from the folder cache to the main cache, and that is quite a bit faster than if Bridge has to scan and re-cache all images in the folder.
D). I don't embed jpeg previews in DNG files. I strip them out of the original raw during the initial DNG conversion. If I want a jpeg I can generate one pretty quickly from the DNG/raw. Bridge makes no use of the embedded jpeg. The only benefit of keeping (updated) jpegs inside the DNG is so that you can browse the files with some other browser, like Faststone, which shows the embedded jpeg.