Newbie you are probably the best credentialed to answer this. Obviously there is much debate about whether to reward "league" players with rep selection over "rugby" players.
Would most traditional league contracts at this level expire after SG ball. Then after 20s etc. If so all the boys who play league, Milne, Moeroa, Lussick etc will have to make a choice at the end of the schooling. By snubbing them from rep football because of a perceived choice seemingly not already made it would most probably make up their mind for them. Perhaps a taste of higher honors might be sufficient to enticing them to stay.
Generally speaking yes!
Most lads who are contracted are done so when they are 14 and 15 years of age. Generally they are discovered at schoolboy rugby and league championships.
At the time of contracting they usually are palmed off to a Sport Manager who the club highly recommends (which IMO is where the first conflict of interest becomes a apparent). The parents are generally ecstatic that their young Johnny has been contracted to an NRL club and are blind to the reality that actually exists; that is they have signed young Johnny up for a three year ascending deal for pittance (e.g., Y1=$750 Y2=$1000 Y3=$1500).
Of course there are bonuses for making State rep teams and these usually amount to $1000-$3000 depending on the year. And to answer your question fully the contract will see a lad out to the final year of SG Ball (remembering that HMC is U/16 and SGB is for U/17 and 18).
If it all comes to fruition the NRL club will explore a further contract into Toyota Cup.
Now there are always exceptions to the rule, as I came across one example where the father told the NRL club that he didn't need their pitiful sum of money, and as it eventuated this lad had a blinder of an HMC season in that same year where he had no less that five NRL clubs were chasing him.
I hope this answers your question!
PS - your last sentence is quite true! I honestly believe Milne will be sold the dream in the same way Rob Horne was!