Hi Liz,
Firstly, There is an excellent free booklet by Eugen Scholz, entitled Hydranal Manual, and also there is now a Hydranal Multimedia Guide available free from Sigma Aldrich. I highly recommend getting one or both of the above.
In answer to your questions.
Question 1.
You chose the Composite 5 reagent according to the amount of water you wish to titrate, and considering the volume/accuracy of your titration device ( often an automatic burette ). Some manufacturers used to provide recommendations, relating reagent to system, so check the instrument manual as well.
The quantity of water in the added sample can also be limited by either sample size or sample solubility in your titration solvent, so you may have to use the 1 or 2 mg/ml reagents, because you only have 1 or 2 mg water present. If possible, ensure the sample dissolves completely and quickly, otherwise titration times are a real drag - 10 - 20 mins or more.
Generally, the smaller the quantity of water you wish to titrate, the more precautions you have to take to prevent water contamination, so the 5 mg/ml, and 2 mg/ml are preferred by lazy analysts like me. You can calibrate the 5 mg/ml using water in a syringe ( eg 1 - 5 ul syringe ).
Question 2
Yes, some organic acids and bases have to be neutralised prior to the titration, KF solutions are weakly acidic and can also react with inorganic oxides, some samples can cause precipitation, you have to have sufficient alcohol present to ensure a rapid reaction, etc. etc..
The above booklet identifies many of the common issues, but you should check new methods, with the easiest way being to add a known quantity of water to repeat samples and check the recovery. Some items don't release all the water unless heated, and special ovens are added to instruments.
Question 3
Consider the answer to question 1. How much water is in your pellets, and how soluble is your pellet in the selected titration solvent?. Assuming that you can titrate all the water in one pellet ( say maximum of 25 mg for an instrument with 10 ml burette and 5 mg/ml titration reagent ), do you want to know the individual pellet water content, or do you want to grind up 20 and obtain an average. You can titrate more water, but the titration often takes so long that you could watch a football match before the result appears.
I prefer to grind samples, and take a weighed sub-sample, unless they are really, really, really

, soluble in the titration solvent, and the ground material is also not strongly hygroscopic. Insoluble material delays the endpoint, and is very likely to decrease the accuracy.
I hope that helps,
Bruce Hamilton