All of these questions are ones you'd have to ask about the system they're working on now, at least with the information we actually have at this point.
As far as a system where you don't wear the gear you convert:
Pick one each of the following from your inventory: Helmet, MH Weapon, Shield, Chestpiece, Belt, Pants, Boots, Gloves, and up to 12 slot points worth of jewelry. These are the items currently getting AP to turn into materia. If you want to wear them, go ahead. If not, they'll get points regardless. I'd personally add a feature to check if you have something equipped in a given slot, too; that way MRD doesn't give you shield materia.
That, plus whatever details they were going to put into the system anyway, should combine so that people aren't wearing sub-optimal gear just to get materia out of it. What gear is worn and what gear is materia gear are now two separate checks, occassionally overlapping. Note that I say pick one of each so that people can't just mass-produce a certain type of materia unless they really want to grind them out one at a time.