In reverse order, because I'm ornery like that.
2) If choosing to play a necropolitan to start, does that mean we'd start 1 level and 1k xp behind the group (halfway to second level), or 1k xp away from 3rd level? Just checking options, though I doubt I'll go that route.
Assuming you were born in the blight-lands (areas of the world to come, but I'm sure this one is obvious without much explanation), and thus would have had access to that template from the start, you would be at level 2, with 1k away from 3rd level.
FWIW: Warforged do exist. If anyone wants to play one. Most of the commoners will just think you're a Golem, which is very, very bad. As in, when you walk in to town, people run screaming. But it is allowed. It will all make sense as to
why they exist in this world if you ever happen across one. And they feel inclined to explain themselves.
1) clarification request for dynamic magic items: how does the level up process work for those? Do we get to choose how the item improves, or is it done "behind-the-scenes" by the DM?
Fluff Answer: The item develops along with the wielder, unlocking its long-lost magic properties, though quite frequently, in the cases of items with documented history, the item develops in slightly different ways. Sometimes this is as minor of a difference as a belt that develops the ability to enhance a person in every way having historically augmented a warriors strength initially, to that same item augmenting a more agile persons alacrity first-most. Sometimes the difference is as great as a weapon using entirely different abilities all-together.
Crunch Answer: Certain things, like the example I'm trying to get done with of Belt of Battle + Belt of Magnificence (primarily, it'll have other stuff too) advances with a fairly set rate, though when it first starts granting bonuses to stats, you get to pick the order if it's on you. To your character, it just seems to develop in an as-needed way. Other items might show up that are what they are when you get them that you then get carte blanche to make it how you see fit (generally, weapons and armor but only maybe other things).
That said, feel free to design your own. I might put it in the world somewhere.
EDIT:
Magic-blooded Earth Suli Wyrm Warrior 3
You linked Spark. YOU LINKED SPARK! I am really, really glad I put in that "please link" thing now. Because
I have asked about doing that before, and not only did I not get a response telling me how to do so, I didn't get a response at all.