In regards to funding, the most likely answer to how Zenos was able to get it under the noses of the Imperial government is... that he got the money for it through taxes. It's already been established that the Imperial government doesn't do a whole lot of oversight of the provincial territories, as evidenced by the VIth being needed to clean up Dalmasca and the horrible treatment of the Domans and Ala Mhigans. Zenos was also known to be taxing his territories rather heavily (probably part of his scheme to stir up rebellions, but the funds had to go somewhere).

Alternatively they're all given R&D budgets without government oversight. "You get [X] gil for R&D, develop some military stuff. We'll have a yearly review, or something."

Ahem. While it's a natural conclusion to jump to, there's nothing really proving their memories were erased in the Sundering. There's been 12,000+ years of historical drift to account for the truth being erased and distorted from common memory. According to Elidibus the truth being hidden was intentional, but whether this was (another) byproduct of the Sundering or something that (intentionally) happened afterwards is unknown. Either way, it doesn't seem to be a danger to life per sé, it just dilutes the aetherial volume of the Source. (And rejoinings don't increase it, since that energy is sent to Zodiark to help him break free.)

That said, actually killing Zodiark would probably kill the planet as a consequence, much the same as sundering him sundered the planet and those living on it.