For the DL metal flights anyway- yes, linking reservations grants domestic upgrade possibilities. If your sister is a Medallion member, she will clear at her Medallion level. If she is not a Medallion member, she will clear at your level. It doesn't make a lot of sense but that's the way it is for DL metal domestically.

On your second question, I am not sure why not. You could book a ticket for a stranger and they could put their Delta Skymiles account in for accrual.