1.) That's a tricky point. If the layout-small is used, I guess you are using the 720x720 simulator, which is Q10 resolution (the Z10 will use layout-large, according to http://supportforums.blackberry.com/t5/Android-Runtime-Development/Android-drawable-folder-layout-folder-for-BB-Z10-and-Q10/m-p/2169275#M3862). Your layout is probably not adapted for a square screen. I'll guess there's no magical answer: you'll have to adapt it. Maybe try it with a Z10 resolution (see point 2) first, to check that it solves your issue.
2.) With the latest simulator, you can choose between a 1280x768 (Z10) or 720x720 (Q10) screen. If the layout is displaying fine on both screen sizes on the emulator, it will display fine on real devices. To change between Z10 and Q10 resolution, you have a number to choose when the emulator is starting (at the very begining).
3.) Android apps runs on two kind of devices: the PlayBook, running BB Tablet OS, and BB10 devices (Q10/Q5/Z10). I guess your question was related to BBOS 7 and before. No, there's no way to run Android apps on them.