You only start earning 500 mile upgrades once you have AA status, but the flight that puts you over the threshold (even if it's on a challenge) will count.

Will you get domestic upgrades? Yes, depending on the routes and times you fly. You likely won't earn enough 500 mile upgrades (or "stickers") to upgrade every flight you take, so if you're not willing to buy any, you won't have too many upgraded flights.

Shouldn't be a problem using your QF card for lounge access even when crediting to AA.

For making award reservations, PLT members get the expedite fee waived (if you book an award flight <21 days out, but not much else. PLT also gets you priority when you call in to AA Reservations, so that might help. And of course, you get 100% RDM bonus, so that helps you get more miles.