1. Ah, that’s a problem. If you need the featured post to be an H1, you might need to create two separate lists. The first would be full width with an H1, and the other would be two columns, H2 (or whatever) and with an offset of 1 in the “More Settings” tab.
2. This seems to be coming from this CSS:
#wpsp-8154 .wp-show-posts-entry-title {
margin: 10px 0 20px 0;
}If you set the first value from 10px to 0px, it should be better.
Not too sure what you mean about being cut off? The small thumbnails?