No, this is normal at some consulates. Penang insists on it. Just show your hotel booking so you can get your visa. It doesn't have to be for the whole time I think.
Multi entry tourist visa from your own country. Would only give you up to 9 months though. Or option b. sign up to do a Thai course with a language school and get an ED visa
You need a valid license. In Victoria you just renew online and have it sent to you. So you could have it sent to a trustworthy person who could then fedex it to you.
It doesn't matter that it's a Muslim country, it's actually about Thai Buddhist modesty and respect. You'll find similar attitudes in most Thai consulates that you go to.