Hello,
1. Depending of the application, would be better to use the second option since the PHY driver will initialize it.
2. 4. 5. JTAG flashing is supported for the device. There are tools like this than can flash the internal MCU of the SJA1110 using JTAG.
3. The firmware binaries are typically in the hundreds of kilobytes range.
6. You may need to configure your device tree and SPI parameters, please take a look in the next link.
Best regards.