In regards to the literacy thing, a pretty big amount of people I've played with all seem to at some insinuate that their letters are written and transcribed by scribes anyways, so that makes the issue of literacy a bit of a moot point. I mean, hasn't everyone at some point blamed a typo or mistake on their "idiot" scribe? If not everyone, I feel it is a fairly common thing. So, nothing implies our nobles are literate, merely that they can have a scribe transcribe for them and read other's letters to them.
Aye. I'm sure I haven't been terribly consistent about this, but generally...Jenred is literate, as he handles enough correspondence that is too secret to entrust to scribes that he has to be by now. Arlian is literate. Malcolm is literate. Damian, Darkwind, Rhennthyl, Lucator, and Colin probably had very basic literacy skills, but have scribes handle most everything for them.