Instead of a blocking volume, maybe use a Static Mesh “plane” instead. I don’t know if blocking volumes are visible, but static meshes are normally visible and can have materials applied to them (including animated textures - I even had one playing a video) and can block things, AND can be transparent (not sure if transparent works with the video textures though).
I don’t quite understand question #1, but if you use BSP or Static meshes then it might not be the same issue anyway.