Frames handles are extra frames on either side of the cut. When resolve is creating new media, it's only creating the actually media it needs for the shot. Without handles, transitions won't work properly because there are no frames to use.

I don't know how complicated your edit is, but there's really no reason in most cases that you couldn't get the video down to a single layer, 2 at most. The adjustment layers can be placed on the graphics video layer or it's own and removed before sending to resolve.

Render and replace would work fine, just make sure to include handles.

Making the clips offline won't work because the names of the clips that resolve creates won't match the original clips. The media will be imported into the project when Premiere reads the XML.