1) should I do it in SGDK2 or SGDK1
Use SGDK2. The final product (a single EXE file) is much easier to use. C# is relatively fun to use compared to the old environment... if you even need to write any code, which you may not if you're using SGDK2. Also, I can help you with SGDK2. I don't use or update SGDK1 any more, nor post SGDK1 projects in the listing.
2) Should I concern myself with footprint? Memory is cheap now. Should I avoid making an 8mb png file for the sky? Avoid a 12480x100 pixel terrain file? Tiles are nice for memory savings, but can be very bland.
That's ridiculously huge for a PNG file. I don't know that SGDK2 could handle a tile that big. So I would say absolutely avoid that. Tiling isn't just about saving memory. It's also about maximizing the value of your work. Maximize reuse to get the most out of your
efforts, not just to get the most out of the available
memory. Imagine if you had to give equal attention to the whole background. You would end up with either a relatively simple background without a whole lot of detail, or it would take forever to fill in all the detail. But if you put the effort into something tile-able and reusable (and use it right) you can get that level of detail everywhere without being too repetitive or bland, and without having to put in so much effort.
3) If I did make large single terrain files how would I import them? Collision detection would be iffy as well, no?
Collision detection between sprite and background relies on tiles. You will probably have to split your scene into tiles one way or another, even if every tile is different (which probably won't be necessary). However, if you really want to avoid repetitiveness and just have an arbitrary background without tiles, you could probably put the graphics on one layer and invisible tiles on the sprite's layer.
Importing graphics should be easy. You can select "Import Graphic" from the file menu of the graphic sheet editor to import a single cell. Or you can select "Import Image as Sheet" to import an image for the whole graphic sheet, if it's the right size.
