1. As @Lillhans pointed out, your edge isn't straight. I don't know if you started with the left or right before mirroring, but none of them are straight, so it isn't a mirroring problem, it is a problem with the original shape. You can't mirror a non-straight edge and expect it to match up (unless the mirror line itself isn't straight). There is a 0.03 map unit horizontal difference between the top node and bottom node.
2. At any point really. Either use the Make Varicolor command on the entities before defining the symbol, or bring up the symbol for editing after defining it and us it on the entity. I do note you have attempted to define a symbol as varicolor in your map, the COSFLAME-VOL symbol, but here you have made the mistake of placing a symbol definition inside another symbol definition. Never do that. A symbol should be defined from base entities, NOT other symbols. Either use Explode on symbols to break them down before defining new symbols from them, or if you just need a copy of a symbol, for example to make vari, use the clone feature in the symbol manager.
3. Save your map with the new symbol in it. Then open up the symbol catalog you want to insert it into in the editor, and go to symbol manager, hit Import, and pick the map with your symbol in it.

500px shouldn't be needed if they are uniform, 1px should be enough.

Nothing special about city maps, the special thing here is the building symbols. Symbols with shading maps (Like all proper CD3-style buildings) don't get redrawn at the end of the effects pass like other symbols do, this is to preserve the shading effects that have been applied to them I suppose. You can of course disable this behavior for all symbols with the DELAYDRAWSYM command.

The point you are missing is that this question isn't about how CC3+ works, but rather about the Displace effect, which uses a normal map to generate the distortion. This doesn't have anything at all to do with vector vs raster or vector artwork. Your understanding is fine enough when it comes to these concepts, you have just missed the context of this discussion.

A normal map uses color values to encode mathematical vectors as pixels, and these vectors aren't visible drawings like a vector line or polygon, but rather a mathematical vector that describes a direction in space. These vectors are expressed using 3 numbers, representing X, Y and Z directions. This is basically just maths encoded in an image form, and is used to calculate the final transform, for example to make the lovely ripples in Sue's Marine Dungeon maps.

@JulianDracos you are mixing vector drawing entities here with mathematical vectors. A normal map is just a grid of (mathematical) vector represented as as an image. Each pixel represents a single vector, where the three directions are encoded as the red, blue and green channel in the pixel respectively. Thus, when a normal map is used with the distort effect, each vector tells which direction to move the pixel at that position in the rendered map.

This is also very similar to how roof shading is done with CD3 buildings.

@roflo1 I don't know exactly how it is done internally, but I assume it calculated as a 3D-space and then projected down to the 2D plane, and the projection used for the actual distort.