Welcome! rd Events are fun and a great way to motivate you to get into running. I was not a runner (but a regular gym goer) when I started, but I've morphed into a runner over that last few years of doing rD races
1) You only register for the challenge, and that is the only way to get the challenge medal. If you register for both races separately you will NOT qualify for the challenge medal.
2) The 16 minute mile pace limit is from the last person to cross the start. There are 15 or 16 corrals at WDW races and there is some time between each corral start. So if you start in corral A you have a lot more than 16 min/mile. That is why it is a great idea to do a Proof of Time race. To move up in the corrals you need to show you have the ability to run certain paces by submitting previous race times. The races have to have official results which you link to your registration online so that the company who assigns bibs can verify your time. For a half, POT can come from of a half, 10 miler or 10k. There is a cut off date you need to do if before in order for it to qualify for the race, and it has to be fairly recent. I just checked and for 2018 the rD site says the deadline in 11/14/2017.
There are a variety of reasons to want a cushion ahead of the sweep bus. Some people want time for pictures, maybe a history of injuries and wanting to know they can slow down if issues arise, or just for the unknown. I have done the race 3 times and each year I was happy to have the cushion for different reasons. I was in corral D in 2016, and ended up with very bad digestive issues. Around mile 5 I realized I was going to have to do a lot of walking. Luckily because I had started earlier on, and had run my first few miles around 10:30/mile I knew I had 8 miles to go, but could walk them at 20 min/mile if I had to (or go faster with lots of bathroom stops) and still finish. 2014 I had IT band issues and although the race went ok in the end, I was reassured starting (in corral F that year) that I could take walk breaks and do some pictures and know I'd have time to finish. And 2015 I was pretty healthy and wanted lots of pictures. Picture lines can vary and take just a moment or two up to 10-15 minute for very popular pictures.
Here is the chart from the 2017 PHM corrals so you have an idea. If you submit no estimated finish and no proof of time, you'll be placed in the last corrals.
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There are separate corral listings for Challenge Participants, the times required for corrals can vary slightly between half and challenge runners, but they are usually very close. If you want to estimate your pace and play around with a calculator that can show you paces required for finish times, I recommend
https://www.mcmillanrunning.com rD uses this calculator. You can put in your finish time at varying distances and it will tell you what your predicted time for other distances is. For rD it needs to be at least a 10k for the half, and its common to use that, because people are usually faster at shorter distances, and getter better predictions.
3) Sweeping does happen. There are people on bikes who cross the line and keep the official pace. You need to stay in front of them. The will warn you, but it you don't make it past certain points by certain cutoff, you will be stopped and told to board the "Parade Bus" which will take you to the finish area. You won't cross the line, but you will get your medal (which is controversial to some).
Edited for spelling and to add corral assignment example.