1. The aggregate in concrete gives it it’s strength. Using only sand would mean it would be weak, not a good finish. Rough angular stones are better that rounded gravels, and ideally you want a mix of sizes, so that the smaller aggregate fits in the gaps between the bigger ones, right down to the fine sand. Think of the cement as glue, you want the thinnest layer possible between the aggregate, no voids with only cement, or worse, air.
To get a good a good finish you need to get all the air put of the concrete while it is wet. On a small piece like this, vibrating the whole of the shuttering is probably the way to go. I’m sure you could use a power tool to get it to vibrate. Once it is good you will see bubbles rising to the surface. Don’t vibrate for too long though, as you can cause the aggregate to separate out with the lightest material rising to the top.
The other thing to do is give it plenty of time to cure. A couple of days at least. Do not let it dry out or freeze while it is curing, or the chemical reaction between the cement and water will stop and it will have a powdery surface.
2. I think setting the bolts into the wet concrete may be best, if a bit of a faff rigging up a way of suspending them while the concrete is beginning to cure. Any sort of expanding bolt or rawl plug is likely to split open a block that small.
I wouldn’t be surprised if it took a few goes to get this to turn out the way you want it.
Please post pictures when it’s done.