Don't be afraid to ask questions, man. I'll help when and if I can, so no worries

1) To make new characters, I make them in game with all of their abilities and powers and whatever else I can think of first. Then, I open up the hero with the EZHero Tool and change their weight, add extra passives if need be, change their AI if I want, etc. After that, I open up the FFX Control Centre and brand them by selecting the mod I want to use, selecting a random character, and clicking "Save". I don't think clicking save is necessary, but I just want to be sure, lol
2) Yes, strength will modify your melee damage quite significantly. At lower magnitudes, there won't be much of a difference, but at higher magnitudes, it can get pretty crazy.
For example: A Low magnitude punch at level 3 for a Strength 3 character will do about 7 damage on average. For a Strength 10 character, the same attack (a low level 3 punch) will do about 18 damage.
A High magnitude punch at level 3 for a Strength 3 character will do about 19 damage. That same punch on a strength 10 character will do 51 damage! Big difference!
Strength will also affect knockback distance. A strength 3 character needs a level 3 melee attack with Extreme KB to consistently knock back a person weighing 170lbs. A strength 10 character can send that person flying with a Low KB attack. Magnitude does not matter.
For ranged attacks, it's all the same as a strength 4 melee attack, both in damage and knockback.
EDIT: Look in the yahoo group link DaGlob posted up above. In there, look in the "Freedom Force Charts" section. I made a graph showing how much damage (on average) each attack at each strength will do. Very helpful for quick balance checking!