@monk3:
1 & 2 — For me, Wordfence has mostly been working well enough with automatic blocking, with the Wordfence security network turned on. (If you are familiar with your access_log files, you will see that when someone is blocked by the Wordfence network, it will have a 503 HTTP response.) I usually only block an address manually if I see it coming back for 20-30 minutes or more, just because it seems to end their request a little faster (probably due to other plugins not needing to do any processing). Usually, when I see an address repeatedly trying to log in that is obviously not a real user, I’ll block them permanently.
3 — I generally block them from accessing the site entirely, since I’m only manually blocking IP addresses that are obviously bad. I often see that their hostnames are hosting companies, which wouldn’t be a normal user anyway. In the site I’m working on, 90%+ of users are from one region, so the China and Russia IPs are very unlikely to be real users, too — so I’m typically not worried that I’ll be blocking people with dynamic IPs that might end up assigned to another real user, or people sharing an IP on public wifi — but that might be a consideration for you, depending on your site’s audience.