Hi daveyd,
1) I'm aiming for a similar sense of progression that was had in Pool of Radiance when clearing the slums, so you're not going to see randomly-spawning mobs in the areas you clear. The danger then is that it becomes boring to traverse through the cleared areas repeatedly - this will be offset in two ways:
a) There will be quicker ways that you can unlock to get down to the lower levels, like pits to abseil down, alternate staircases, etc.
b) There will be scripted re-populations of certain cleared areas based on whether particular events happen in the game. The appearance of re-populating monsters will make sense in the context of the game's plot.
2) No, it's unlikely that you would get anywhere near level 20, unless you spend a huge amount of time grinding in the swamp. Depending on the number of side quests you complete, and how thorough you are in clearing out the megadungeon, you can expect getting your characters to level 8-12 will be sufficient to be able to defeat the main villain and complete the game.
3) Subterranea supports "save anywhere", so I'm sure that reloading will be an option taken by many. For those who like to deal with whatever the game throws at them, you will either need your own Cleric to be powerful enough to cast Raise Dead, or you'll need to use a Raise Dead scroll, or you'll need to visit a temple for one of their powerful Clerics to cast it for a hefty price!
4) You will be able to create additional PCs to add to your Character Pool at any time, and when in-game, travel to the tavern in Gimlet Town to "recruit" them. The Character Pool will initially come populated with a number of pre-generated PCs - these should be thought more of "PCs you didn't create", rather than NPCs you would normally see in other CRPGs, with their own dialogue and plot lines.
Any PCs added in-game will start at Level 1, with 0 experience though, so if you make a mistake when constructing your party, it will be best to fix this early.
5) I would love to keep developing Subterranea into a series! Out of necessity for a first time indie CRPG title, the scope of the environments is set to what is achievable in a realistic timeframe. If Subterranea is received well, development on Subterranea 2 will commence immediately. The ruleset used will remain the same, the gameplay systems will evolve based on feedback and the content will be greatly-expanded. I'd hope to have multiple towns, many villages, an overland environment teeming with points of interest, and of course multiple megadungeons to explore.