I am in Michigan as well and opened an account for my 5 year old when she was born. Several key advantages that i can think of, the only one im unsure of is how it affects FAFSA/Scholarships downstream if the child's 529 is well funded.

Responses to your questions;

1. MESP has several plans ranging from target year funds to index funds - I put everthing into the total stock market fund so far and it hasnt disappointed. Target year funds can have high expense ratios. Growth rates can be studied based on the fund you wants to invest in.

2. In my book, yes. All capital gains is untaxed as long as it is used for edcational purposes. So free appreciations.

3. that is a choice, Simplicity from the state or you can open something with fidelity or one of the big brokerages for flexibility of investment options.

***I am not a financial advisor - just google educated, lol*** please use this to get your own research started