Will the 12th man be more like a super-sub or as in the OP can he only bowl? What I mean is, if we bowl first will the 12th man come in and then go back out to make room for the specialist bat who's spot he took?
12th man can bowl but not bat, but that basically just means you should name the worst batsman in your team at #12, even if he's your best bowler. He's a full member of the team really - you're playing with 12 but you just stop batting when you lose ten wickets. To give you an example, McGrath would have always been Australia's 12th man.
Nah, the same rule has been used in other one day domestic competitions around the world previously. It was even part of the Australian OD domestic competition at one point. It's not particularly common anymore but it's been done before. The only unrealistic thing about the competition is the "max of 45 overs between any five given bowlers" rule; I don't think that's been done before but it's hardly a fundamental change.
It's used in most of the rep squads round Melbourne. I always ended up 12th, pretty relaxing when the skipper bats first.