T3 to T1 is a short airside walk, I wouldn't really call them separate terminals in fact. I've never heard of this shuttle bus they talk about, although I don't use T3 very often. [I think they may be referring to a land-side shuttle]

you can see the (rough) terminal layout here (A=1, B=2, C=3)
http://www.cheapflights.co.uk/i/11576.gif

10.20 departure will be late enough to be past the main bulk of flights between 9.00-10.00, so it shouldn't be a difficult connection for you or any bags.

In my experience hand luggage limits are not checked or enforced by AZ, and if they were there would certainly be flexibility, esp. for J passengers.