It will do be a very minute time as the rules need to be checked before things can go ahead. If something is unknown and possibly malicious an alert will be generated. The differance is hardly noticeable, try it!
2.This is entirely up to you. Defence is much more powerful and like you say has more options. UAC can be left on though and will still appear when it`s supposed to. I myself have left it at the default Win 7 setting.