cut the hoses with a razor blade, cut it straight and square. If there is a hydraulic supplier near by, they sell a smal plastic hose cutter for a few bucks that works real good. It shouldn't matter if the hoses are different lengths, but I've found you usually trap more air in the long hose, so it takes a little longer time to react( you probably wouldn't have noticed if I hadn't said anything). If you could get 100% of the air out, it won't make any differnce. transmisiion fluid is fine. And you don't have to bleed them, I've done it before( makes a mess), but they usually bleed them selves out after some use unless you run the hoses higher than the pump(traps air)
this should answer most of your questions
http://www.bennetttrimtabs.com/faqs.php