If your installing to the inside of your crawl, insulate whatever the height of the crawl walls are. Remember, much of this area is undergound & ground is an insulator, be it a poor one. The farther down you go, the less effective the insulation.
2/ poly on ground
Cover as much of the ground as you can with the poly in direct contact with the ground. the function of the poly is a vapor barrier. It's there to prevent the water vapors in the ground from going airbourn. Since we are using the poly as a VB and not an air movement barrier, we don't need to be as detailed. Cover 95% of the surface area & you solve 95% of the issue. There is no real need to tapre every seam (If you want to, it won't hurt, but it also won't make any significant difference. Run the poly right to the sidewalls.
3/ To heat or not to heat
The only reason to heat the crawl area is for comfort (Keep the floor above warm). Since it is included in the homes thermal envelop, it will stay warm, though not as warm as the living space (It's temperature will be more governed by the latent ground temperature). As far as concerns over condensation, since we have stopped the mechenisms for moisture to enter the crawlspace, we've eliminated the concern over condensation. You may notice moisture under the poly, but thats nothing to worry about (the poly is keeping it out of the crawl). If you choose to heat it, you may consider including in you heating system. That works fine on new homes, still, you would want to consider what has been growing there through the years of neglect and decide that you don't want that circulating through your house. Perhaps a single thermostatly controller electric unit would be better.