For the 1st Q, yes create the corresponding distributed PortGroups and then run the VSS-2-VDS migration operation.
For the 2nd Q, your plan is Ok, totally regardless of physical networking structure and VLAN configuration, do like the following list:
1. Migrate some of pNIC to the VDS.
2. Migrate MGMT port group to the VDS and check the ESXi host connectivity
3. Migrate other VMs networking and check their connectivities
4. Migrate remain networking object to the VDS at last
I put the link of my video series about how to VDS migration here, I described there with more details. I hope it will be helpful for youPlease mark my comment as the Correct Answer if this solution resolved your problem