1. Yes, you would end up with html + jpeg/png files naturally, I had a single index.html page with links to the diagrams in jpg format
2. There will be (most probably) some questions regarding some NFR's in your solution so for sure you will have a place to write about it.
I’ve looked at a lot of different solutions, and in my humble opinion Aspose is the way to go. Here’s the link: http://aspose.com