1. If I tell all my VMs(servers)to install Tools(automatic) and hold for reboot(with the various command switches) and leave them all pending, will that cause any issues with dropped network(when nic driver updates, etc)?
Usually not, but, in general, this should be something you hold for a short and not long time. It's a mixed bag because you never know what exactly they updated in that version, so your results may vary over time.
2. Should I go after trying to get all my VM versions updated all the way, or not? (I know I could take snapshots and failback) The other option is to follow VMWare's advice and leave them alone?
Generally speaking, if you don't absolutely need any features or functionality in a given hardware version, there's not a good reason to upgrade. The exceptions are backup software compatibility and Spectre vulnerability patching (v10 needed). Other than that, probably don't want to roll the dice. And I'd especially not recommend updating to the latest hardware version, again, unless you're doing so to fix a specific problem. More often than not, bugs related to hardware occur in the latest one available.
3. If I do tell a server to upgrade tools(automatic), and hold the reboot(with the advanced option command) . Then I power it off, upgrade hardware version, and power it back on all in the same reboot. Is that an issue?
Yes, that is an issue and don't do it. You need to upgrade tools, reboot, ensure the VM is up and the new version took, and then upgrade hardware. Reason being that newer hardware has a requirement on newer VMware Tools, and so if you attempt to do them together you could put yourself in a no-boot situation which is obviously no good.
