Hi Simon,
I was involved in multiple similar scenarios. Companies did want to compare the Dynamics 365 solution with other vendors. I can provide some answers for you:
1. It depends on the number of employees to get them trained and the policies you want to setup in the environment. Usually it is about weeks rather than months. Setup a test instance is quite easy.
2. All users who will get access will need to have a team-member license. Users already having an operational license, can use that one.
3. I'm not familiar with the Australian specific regulations.
4. During several tests, the app was always working.
You will need to compare licensing and required features. E.g. In a certain scenario a customer was evaluating specific expense management software which was quite convenient to use and had easy features for mileage calculations. Dynamics 365 expense management is straight forward and mileage needs to be entered manually. The advantage of Dynamics 365 is that it is integrated with the financial backbone.
Another customer found out that their HR solution also had an option which was already included in their licensing. In that scenario they had chosen for the cheapest solution.
If the majority of the users already have to use other Dynamics 365 features, then they already have licenses which makes the Dynamics 365 solution affordable. In a case, a customer had to acquire 500 additional team member licenses where out of these 500 the majority only had to use expense management one or two times a year and some never used it. So be aware that you don't buy licenses for dormant users.