1. Yes, it is possible to do an in-place upgrade.
2. Use the macOS High Sierra Patcher tool to download a copy of macOS High Sierra, create an installer USB drive, boot from it, but simply select the disk containing Sierra to install on, without erasing the disk in Disk Utility. Run the post-install patch after installing, of course.
3. You can convert the drive whenever you wish, however you'll need to be sure to re-run the post-install patch after the conversion if you do it after installing. Just a warning, I'm not exactly sure how the APFS booting implementation will handle your "home-brew" fusion drive, so be sure to back up important data in case it doesn't work.