yes, you can plug the hole above the waterline if its quieter to do so.
The hole is there to let air purge out, sometimes its the exact opposite...if the hole isnt the air pushes down through the whole pipe.
I would lift up the out put lockline nozzle, from the pics it looks as if it might back siphon too much back to the sump when powers out.
Its ok if the overflow drains, but if you dont like it draining, glue it.
The reason for this is that if a small fish goes in there or theres a need to clean it, you can pull the standpipe out.
Yes, you can restrict the pump and it is necessary to do so on most systems.
Marc.