To the first question, yes. All the BiS sims done for DW have shown masterfrost ahead and they have the 2p bonus.
For the second I'd say they'd probably be about equal but you'd really have to sim in your gear to be sure. That said, DW performs a bit better in real world scenarios than 2H due to higher damage HB's when you're at range and no issues with wasting KMs so DW would probably be the smart choice there.
The set bonus does not change your rotation by any way. It will just be a huge (in regards to what gear upgrades offer you that 10% is godlike) buff in DPS you will see. Yes use the heroic axe it's by far BiS unless you can get the hc sword from HoF, but even then if your orc it will be almost even as you have axe specialization.
Also as a quick tip, thats what I did, try to get the conquest 1h axe/sword for your offhand. I know it's not that "epic" but still ilevel 470 better then 463. And on weapon DPS last time I simmed myself, MHDPS was almost 2x better then strenght, OHDPS was about 0.8x strenght. Meaning your best DPS weapons should always be equiped in MH. Just another tip from me.