1) You can have breakfast at Nawabshah but for that you will have to go inside city. Also check our thread I posted ahead.. from where we did breakfast right after Hyderabad was really good place. We recently did our trip through Mehran Highway Thread URL and found good washrooms at Askar Pump (after Nawabshah bypass), another Askar pump after Jhango wassan and before Kumb. Do take care at Kumb (see GPS) or u end up at N5 at Ranipur Riasat. You will have to take a right from bazar there.
2) Not ok to travel.. Still many diversions.. most of them are at Ranipur area..
3) Babusar won't be open in May. KKH would be good to go.
4) Yes ok
5) Sadiqabad (Daman Guest house.. on Highway-city road).. RYK (no idea).. Bahawalpur (New Bahawalpur Hotel, Hotel One), Islamabad (too many to choose), Abbottabad (Hotel Demanchi), Besham (PTDC), Chilas (Panorama or Shangrila)
6) Easiest.. Even a car can go..
7) Almost at par
8) At petrol stations toilets are usually better. You will find good options at Taxila, Haripur, Abbottabad, Mansehra, Battagram, Besham, Dasu, Chilas. Food is awful on KKH but u may try at Besham its reasonable.