1) I believe we discussed blowing images up in one of the previous threads
Our original view on this is that blurring images is not generally desired when they happen to be smaller than the current viewer container. But... we will consider auto-enlarging the images beyond their max in the next release as one of the zooming options. It has been on our list of enhancements.
2) Please try relative height (and width) in the parent viewer container, e.g height: 100%, and then I believe you can control your parent aspect according to your specific needs and the viewer will follow. You may need to remove responsiveBaseWidth parameter for this to work the way you need.
PS: "Mobile full page" that you can select on Publish is a fully responsive template, considering 2)