This aspect is no different to normal slab reefing. You can tie up the loose sail if you like, but in my experience, it generally forms a neat fold (rather than a great saggy bag) and doesn't need it.
I agree, there's no problem with a great saggy bag. But be careful - if it is raining, the reef catches a whole lot of water, which you empty neatly over yourself when you shake out the reef.
Absolutely. Some boats have a line of reefing points but I was told its a mistake to use them as the sail can tear if they are not sufficiently reinforced