A1: Volatility implied by what model? :)
A2: Check what the volatility smile is and how it affects your model.
As @frido insisted, I would add more details.
"Why not 1 year IV"
Because processes are different. CIR distribution (Heston) is different from brownian motion with constant IV (Black-Scholes).
But you can try 1 year IV as an initial value for callibration.
"How far the OTM?"
From a first glance, I see 2 main reasons not to use far OTM options for calibration.
First of all, it is a matter of quality of your option board. Far OTM options (> 3*sigma) tend to be "rounded" or inadequate. As a result, you would calibrate on option prices affected by technical details.
Second, Heston model has no idea about "fat tails".
What is the minimum? Heston model has 5 parameters (kappa, theta, v0, rho, sigma). So, you need at least 5 points to optimise. :)
I would recommend using 1 or 2 sigma and then go deeper in time.
The way to calibrate Heston model I would recommend: https://www.maths.univ-evry.fr/pages_perso/crepey/Equities/051111_mikh%20heston.pdf