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1.) There's no indication she was faking to any great extent. Quite the contrary in fact. She was launching those nukes for pretty much the sole purpose of ending her brother's sins. That later conversation about hatred seems to jive more with Schenizel's plan than what Lelouch intended, not that the two plans are all that dissimilar. She recognized that Damocles was a weapon of unrivaled power, and that people would come to hate it, but this is not really her plan.
2.) Even a dictatorship is not necessarily bad, and the only difference in rule between Charles and Lelouch is a bit more transparency. Charles did the same thing, and didn't really have to answer to the lesser government positions. Lelouch merely made his decisions publicly.
What he did to gain his power is of little consequence in light of what he uses it for. By all accounts, he did nothing but good in the eyes of the common man and even the people who knew how he obtained that power, yet they treat him like crap at the ceremony regardless. I'm not saying they were entirely wrong in their requests, it is reasonable to prevent total vote control by a single nation, but 20%? That's not being cautious, that's being petty, and the pop-up barrier is a slap in the face at surface value. For all the good he did, he got no respect for it (I expected it from Ohgi and the others, but I honestly thought Kaguya and Xingke would at least give him the benefit of the doubt). Frankly, they did nothing but give him the excuse he needed with their actions.
The Suzaku/KoR battle served to cement his rule. Ever heard the phrase "speak softly, but carry a big stick"? Fear is just as important as respect to a good ruler. You want to come across as a nice guy, but also one that could thoroughly kick ass if called to task. Not only was that battle something any leader, intentionally evil or not, would benefit from broadcasting worldwide, it was a perfectly natural move.
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