1. It targets based on range from the boss, however it doesn't always target a person at range if there aren't enough people at range. The best way to describe it would be "it does not target melee if there are enough people away from melee range." Having healers at melee range works (provided you have enough ranged DPS), but they would have to run out during whirl so you might as well have them at range.
2. Stay stacked at all times except during empowered whirl. Having AE stuns and silences make handling those MC'd people trivial.