Hi. I've done a full campaign as the Papal States and they are absolutely fine, apart from the few instances you have mentioned.
1) That is just placeholder text.
2) Again, a placeholder (if I remember correctly, an RTW map)
3) This is somewhat annoying, but not gamebreaking. At worst, you just wont have to fight the Aztecs.
4) This leads to
very fast expansion of the AI (check out the "Who am I" thread, a few months back I uploaded a map where this happened). Just let the AI pay for it all
5) Just conquer the world! (Another placeholder)
As a side note, remember that you can excommunicate factions at will, you control the inquisitors, and have very powerful armies.
On the other hand, you cannot
call a crusade yourself; you have to wait for one to be called. Also, you
must keep recruiting Catholic Priests, or else your faction will die out. Furthermore, you will have no family tree, and therefore no princesses. However, you still get adoptions and 'Man of the Hour' events.