1. are they really worse than other economy seats?
No, they are not. Just avoid the 787 if you can - every operator, save for JAL, have outfitted their planes with the narrowest seats you can find in longhaul.
2. is it worth upgrading to premium economy (hopefully using flying blue miles)?
KLM does not have Premium Economy. (Air France does).
KLM only has "Economy Comfort" which involves a few extra inches of "legroom" or pitch.
Most people would agree, I think, that spending so much exra money for a family of 4 for an extra inch or two makes no sense.
3. Do they allow seat selection at the time of booking?
Yes, but at a fee.
If you book as a group, then you will all be able to select a seat for free from 8 days before travel.
Otherwise, you can only select a seat for free when check-in opens.
4. I'm able to transfer Chase Saphire points to "Flying Blue" how readily available are economy seats redeeming f.f. miles?
You can play around with the Flying Blue booking tool to your heart's content. You don't need to have any miles in your account to do this.
Bear in mind, though, that once you transfer miles into Flying Blue, there is no way to get them back or to undo the transaction. So you better be absolutely certain that you can use the miles, and will use the miles, after you commit to transferring your points into Flying Blue miles.
There have been multiple reports in the last few years of people making redemptions using brand-new Flying Blue accounts, fed solely with credit card transfers such as you propose, only to have the accounts closed/audited and the ticketed award flights cancelled. So be careful.
I have never flown KLM and really concerned. I was choosing KLM because they offer non-stop flights. Would I be better choosing a different airline even if it requires a change of planes?
What do you mean here? You will have to change planes in Amsterdam anyway. Why is this preferable than changing planes in, say, London, or Dubai?
Of course, unless you have to be in Amsterdam there is no need to restrict yourself to transferring/holidaying in Amsterdam.
Why did you initially decide on KLM?
On random dates next March, I can see that Emirates is the cheapest, and $200 cheaper per person than KLM. Even Delta is cheaper - though this means flying to JNB (Jo'burg) and onwards on a Comair flight to Capetown.
And was the 3-day stopover in Amsterdam to "break" the journey? I find that it is better to get all the travel over in the one go - so take the two longhauls directly one after the other - as otherwise, it actually delays you from getting to your chosen destination, and it does nothing to help with jetlag (though, in this case, the similarity in timezones between Europe and South Africa makes this less of an issue).
My usual strategy for 20+ hour flights: don't stopover at the connection airport, just go straight through. And pick a flight that gets you to your destination as late in the day as possible (if there are a range of possible arrival times). Arriving early in the morning or during the day would require you to stay awake until the normal local bedtime in order to beat the jetlag as soon as possible. But having arrived on such a journey, it is very difficult NOT to give in to temptation and have a nap - which actually will drag out the process of acclimatising to the local time.