Al-jawab billahi at-taufeeq (the answer with Allah's guidance)
1) At one time Prophet (Sallallahu Alaihi Wasallam) hair reached till the lobes of the ears, then another time it was in between the lobes of the ears and shoulders, or till the shoulders. It also has been proven that Prophet (Sallallahu AlaihiWasallam) shaved the hair of his head.
Please view this link: http://www.inter-islam.org/hadeeth/st3.htm
2) Unfortunately, there is no reports of how the oil was applied by the Prophet (Sallallahu Alaihi Wasallam) on his hair.
Anas bin Malik (RadhiyAllahu Ta'ala Anhu) reports:
"Sayyidina Rasulullah (Sallallahu Alaihi Wasallam) often rubbed oil in his head." (Tirmidhi)
Nafií (RadhiyAllahu Ta'ala Anhu) narrates that Ibn ĎUmar (RadhiyAllahu Ta'ala Anhu) at times would apply oil twice in a day. (Al-Musanaf Ibn Abi Shayba)
When the Prophet (Sallalahu 'Alayhi Wasallam) used to put oil on, he use to put it in his right palm and begin with his eyebrows and then his eyes then his head. (Jamií al-Saghir)
When any of you apply oil, let him begin with his eyebrows, because it takes away headaches. (Jamií al-Saghir)
To apply oil on the head one may begin with the right side of the head first, then the left side of the head.
As it is superior to begin with the right for all noble matters, for this was the way of the Messenger of Allah (Sallallahu Alaihi Wasallam).
Aisha (RadiyAllahu Anha) says, " Sayyidina Rasulullah (Sallallahu Alaihi Wasallam) liked to begin with the right while combing his hair; while performing ablution (wudhu) and when putting on his shoes. (Tirmidhi)
And Only Allah Ta'ala Knows Best.