We are unsure if #2 is possible in TeamSite. Can anyone shine some light on this? Perhaps there are libraries that provide this functionality.
It won't be trivial. There are no libraries, not TS libraries anyway. You would have to code your own wrapper(s) using MS Project APIs. IWOV CSSDK is normally a toolset to do this sort of Client Coding / Piping, you may have an extra headache trying to talk to MS using Java and what not.