[popcornmix]

2) When using Software Decode my Rpi gets pretty hot (getting heat warning icon) - I am using the official kodi case - am I the only one?

Software decode will inevitably get hotter than the more efficient hardware decode.
Is the video playback fine if you ignore the warning symbol?
If so, then "avoid_warnings=1" in config.txt will hide the warning.
No harm will occur - the throttling stops the temperature reaching undesirable levels.

If the throttling interferes with video playback then a themal solution is needed.
I use a FLIRC case which is *very* good and would solve the issue.
Removing the current case and aligning the pi pcb vertically may help with ventilation.
A stick on heat sink helps a little (but much less so than a case like the FLIRC).