1. I seriously doubt it. KEH is a seller, not a haggler. If you want a price break, go with BGN or UG grade.
2. Yes, they do grade quite conservatively. I've personally bought BGN equipment that I'd grade as EX, UG that I'd call BGN, etc. KEH does guarantee their gear to work and generally they do go over everything beforehand. However, they can't go over everything with a fine-toothed comb and sometimes you can get hold of something that looks okay but doesn't function as it is supposed to. I've had to return items because of that before, but they've always been great about it and paid for the shipping back and the shipping of a replacement. That said, they're about as perfect as one can expect a gear seller to be, at least in my experience.

Case in point: Last fall, just before going on a trip to St. Louis, I bought from them a BGN grade Minolta X-570 (35mm SLR), and an UG grade motor drive. The camera worked fine except that the frame indicator didn't advance on the camera; on the motor drive the shutter button worked but didn't advance the film. After my trip I called them, they set up a replacement order, and arranged for me to ship back the items for free. The replacements were shipped to me for free as soon as they received my package, and they were in perfect working order.