I'm quoting figures from memory, don't take them as absolute.
The large hole is at the end. The point is that it forms a secure hook onto the nearest cap bolt, held loosely by the large washer and losely tightened nut. The bend should come, at about 3" as you say, ie coinciding with the valve being compressed. (I've just remembered I improved on the design by fixing a 1/4" bolt projecting downwards at that point, to stop the bit of tube sliding out sideways)
I think my lever was about a foot long, but that's not critical. The springs aren't that strong by the time you have that much leverage on them.
When you have the lever in position, you can gauge how long the sleave needs to be to get the best leverage on the top of the valve stem. About 2" is my recollection.
The diameter is not critical. As wide as possible up to the diameter of the tappet bucket. I cut out a section from one end perhaps 1" of circumference, and maybe 3/4 of the length of the sleave. You need to leave enough to still get a good seat on the valve assembly, but with the access aperture big enough so that you can see inside and fish out the little collets.
I do remember that as you compress the spring it has a tendency to move off centre, because the hole in the cap is wider than the diameter of the valve stem.
That can be used to advantage, because it gives a wider clearance on one side. Get the first collet out there, then push the other one round on its groove until it too reaches the widest point. Reverse this process to get them in again afterwards - ie get the first one in, then push it round to the back and do the second.
I emphasise again, plug all the oilways and galleries with rags. You do not want to lose a collet inside the engine!
As to the likelihood of wear, it depends on so many things. There was barely detectable sideways movement in mine after 300,000 miles.