1. Prep just how you did but instead of soaking them wash them with a bristle brush and dish soap, rinse and repeat 3 times. This will take care of the oil.
2. I Haven't had a problem with "shrinkage"
.... but really I haven't you can over lap the skins a little when gluing them on. When they dry they are pretty thin and plus you are gong to seal and sand. Its not noticeable if you line it all up.
3. Dry it first to be sure that you have taken all of the oil out of the skins. TB III works well with the skins. just put a thin layer on the back and let it dry then add another layer on the bow and skin and lay them down from the center to the tips using your fingers to make sure to get all the air bubbles out from underneath.
4. Do not sand before you put them on the bow... unless you want them to be thiner, but they dry pretty thin so no need to sand.
5. I was worried about this myself but there is no need to worry when you are smoothing out your skins and taking out the air bubbles make sure you are doing it in the same direction that you were able to pull the scales out. Doing this will make the pockets lay flat and when it dries it will be pretty smooth.
6. I've never used true oil but i'm sure it would work. After applying a coat or two go ahead and sand, and then apply another.
7. Its up to you... you can use either just remember that what ever color your bow is it will show through the skin when dry. These skins are pretty transparent.
8. You could plastic wrap and then ace bandage it if you don't want to glue your bandage down too. Try not to put too much glue down, its a pain to get off if its on top of the skins.
Welp there's my 8 cents worth, but like the saying goes "There's more than one way to skin a carp!"