1. good catch, thanks Yes, everyone has to pick a side, light or dark.
2, Yes you can. But bear in mind the judges know the what the theme is. If they can't easily understand what side you are representing from just a look, it is likely they wont judge in your favor.
My personal advice is: while concepting imagine you are working for a movie. The viewer needs to be able to understand what side the champion fights for, and how they can fight, from the first moment they see them, without written explanation.
3, Just the visual side will be judged. The model does not need to be game ready and there is no limit for polygons or textures.