iPad Air 5 Screen and LCD display is a single Panel. So, even if the top screen is cracked, we have to replace the entire Display panel because it comes as a single unit.
Yes, only if it is Generation 2 Apple Pencil. We can not confirm any 3rd Party Pencil will work after iPad Air 5 Screen Replacement but yes, for sure Apple Pencil Gen 2 will work.
We use zero or max 1 cycle count batteries for iPad Air 5. Battery Health will show 100% but only when connected to 3rd party tools. iPadOS doesn’t have battery health option in their settings.