First about your Questions:
1. Yes. While Building Structures you want to use PlaceHolder. You might want to use a Placeholder for branches aswell. Makes it Easier later.
I would Suggest you take a Look at a Little programm I wrote:
It is a Tool to Change PlaceHolders on multiple BO3 Objects. Makes creating large Structures MUCH easier.
Yes. Fix, below.
It MIGHT branch alot and at one Point the Branches will just be Cut off.
TC has a Limit on Chunk Radius (Limiting the SIZE of Structure) and a Branch Limit (Limits the Size and Complexity). Both can be Configured. The Branch Limit (Amount) is set inside the Objects, as "Branch Depth". While the Other Setting is somewhere in the TC config or WorldConfig, i´m not sure right now.
To the MainPoint:
You will have lots of overlapping happening in your Dungeon with that Approach.
Basically most of my Post were about the Problems you are going to Face with your Approach.
I made some Illustrations: Basically Each Square Represents a "Hallway" or "Room" unit. To make it Easy I suggest keeping it the same size. (I Suggest 16X16 at most) Depending on your BuildStyle 15X15 works better, because you have a center Block thats always the same to each Side.
This is the Possible LayOut of your Dungeon. This Shows where your BRanches may Overlapp. Because you can Branch in every Direction.
Now, to Fix it. (This Time with Pictures, Yaaaaay). It will take some Effort though.
First you have to know Which Squares are Valid for each Direction, this is Straightforward:
You Could also use a "Square" layout instead of the Triangles. Doesnt Really Matter. Green is Obviously the Center.
With this Layout you can clearly see where youre Branches are Supposed to go.
Because with the Current Limitations on Branching you cannot have a true random dungeon. But you can make it as Random as Possible.
The Thing is: Each of the 4 Directions have the same Space (Relative to the CenterPiece and Rotation) That means, if you now decide/work out the Northern Part, it can be used for all other directions aswell.
To get it "Rather" random we Split the Northern Part into Parts aswell.
Now, you can Get even more Randomness, but its more Complicated, if you want I can delve into that too. But we keep it "simple" now.
With this layout we have 4 "Parts" of the Dungeon that should be have 2-3 different Layouts.
Now, we need to Ensure Each Part is Accessible. We need to "Enforce" Connections.
Here each Red Dot Represents a connection between the dungeon Part.
The Important part is that they line up in every variation.
Now I Painted the 2 Possible Layouts for the parts.
Now. I Would Suggest creating Empty Objects. For each Part.
And so on. Each Part will Branch to the next Part of course.
When you Branch from: A4 to B3 you would make a Random Branch: of Either Dungeon-1-B3 or Dungeon-2-B3
With that, even with only two Layouts for each part. You can randomly generate up to at least 64 Unique "layouts".
Now you will each of those Empty Object have a Branch at 0,0 with either a Room/Hallway or whatever.
I hope this is understandable, I´m not that good in explaining.
For Learning Purpose:
It isnt a "Complete" dungeon. But it should give an Idea on what I tried to Explain here. To Spawn it you would just add "Stronghold" to your CustomStructure.
(Would be Cool if someone can just give it a try and say if it works. I dont have a TestServer around right now)