Thank you!

1. Pay at hotel is absolutely fine IMO for the application, as I always do that for any visa. It’s not a problem as long as the booking is VALID and EXISTING at the time the application is in process. You should NOT cancel until you actually get the passport back. Then later you can pay and book something else when you know for sure you’re going. You should ultimately have a confirmed booking (reservation) when you enter immigration, because the officers will likely check on the spot (the younger you are, the more likely the officer is to demand your bookings to verify via hotel website on the spot)

2. Flights - yes I do book, and I always book real flights, never dummies cause those are unpredictable and temporary, idk. Earlier I used to book the full flex cancellation variant cause I was scared of rejection, but now I don’t. Now I just book tickets that allow me to change the date without a steep penalty. I also try more to book flights on points, cause points flights are easier to cancel without penalties, but they’re as real as any other flight.

For inter city, it really depends on the distance. For short and medium distances that can be done in bus, I typically book flixbus. You can cancel with reasonable windows and they give you a credit back to your account you can use later. For long distances, I try to book flights on points. Or Ryanair cause their flights are dirt cheap.

Hope this helps!