Hi, and welcome to our little corner of the world.
The blowing up to 100% question relates to making photocopies. Since the pattern used in a project is destroyed, you don't want to use the original. So this gives you the scale to make the copy, and permits the publisher to print patterns smaller for magazines (if required).
The type of wood, depends on you. You can use just about any type of wood, but should select according to what you like and want to do. As Carl mentioned Baltic Birch ply is a good choice for fretwork, whereas you would prefer "real" wood species for intarsia.
The blades do make a difference in my opinion. You should get some good blades such as Pegas, Flying Dutchmen or Olson, among the good ones, they help in getting a smoother cut.
You need to drill the holes in accordance to the blade size; I believe Olson publishes a good chart on the type of blade and size for different materials.
You can find a link to their website by clicking the "Other Great sites" link under the "Scrolling Community" header on the left, then click "Advertisers"
Hope this will help alleviate some of your frustrations.
Do post pictures of your work, we like to look at them.
Keep your first piece, no matter how bad you think it is, as a reminder of where you started from. You'll be amazed at your progress in a short while, and will have a comparison point to encourage you.
And do not hesitate to ask questions: the only stupid question is the one not asked
Regards,
Marcel