I always keep mine separated until 12 weeks. At that age they are usually big enough to fight back, or at least survive the pecking. I know some that have done it earlier but 12 weeks works for me. Just remember to feed everyone flock raiser because the 12 week old girls can't eat the layer...
Chickens are far more resilient than most people think. As long as they are dry and draft free (and are fully feathered) they can take temperatures that get pretty low. The only time I turn a light on for them is if the temp drops below freezing.
The "show" I think you are hearing about refer to county fair type shows where farmers and students (4H and FFA) raise animals to compete. As far as breeds, if you aren't planning on keeping a rooster and hatching out eggs try several different types. We really liked the rhode island reds but...
I just use the DE. I only put a quart or 2 in their dust box at a time but I've had good luck so far. I use the Red Lake brand but I don't think brand makes a difference.
Meal worms! They are like little crack rocks for my chickens. I keep the dried worms in a mason jar and the girls know when they hear the sound of me shaking the jar it's time for a treat. That's how I trained mine to come home at night.
I use diatomaceous earth for my girls' dust bath. Ive read it keeps the mites down and I'm guessing it works. 2 years into my chicken raising and haven't seen the first mite. Though my girls are mature layers. At 3 weeks I wouldn't use the DE just yet though.