1. This has to be done in your animation tool (in this case, Milkshape) and is a hassle because you have to move the root bone down for every animation frame. You're better off simulating this in code with a pivot. Place a pivot in the middle of the model and parent the model to the pivot. Now manipulate the pivot and not the model directly.
2. You can adjust joint display in Milkshape's preferences.
2. You can adjust joint display in Milkshape's preferences.