Caged doesnt need padding far as i am aware. And it always "used" to be you needed to VASS ENGINEER the car as a 2-seater, and rego if you are going half cage and taking seats out, belts, couplings etc. The same applied if you have a fixed back from seat (and no cage). As people cant get out in event of accident etc.
Wether the rule about the cage/re-rego has changed or not i do not know. Brown Davis are on top of the laws so it wouldnt surprise me, and that VicRoads stafff simply have no idea. Just go and ask Brown Davis for where the ruling is etc, they shouild be able to tell you where if they knew about it.
As for the pics - common place these days, expect a full EPA once they send the pics off.
You usually get a "date" to present it by when the letter comes. Usually a few weeks. You can always write and ask for extension due to work/personal reasons to get more time however you won't be able to drive it after the "date" they give you.