There is no need to be rooted if you use TWRP for backup. For other methods like swiftbackup etc you will have to root.
I have done several backup for different phones without root.
Sure you can. The sim was used as means that Xiaomi can track your phone when you registered the waiting period of unlocking.
I have done many times for different phones.
I never succeeded. Even though I can update twrp recovery to 3.5, I got bootloop trying to boot to system. Also, I cannot decrypt data and no password was asked by twrp. I ended switching back to 3.4.