1) yes, if this is an excerpt from the source, used as proof of this fact, then it should go with and stay with the citation information. This is the correct placement of this information. Just because FTM can't produce a footnote is not a reason to put data in the wrong place in the database.
2) in theory you should be able to put as much information in this field as you want. If you can't this is a bug. However that being said, an excerpt is normally short. Remember, this is an except from a source regarding this fact not the whole person. A death fact except from a book should only be a sentence or two long. Not many cases where you would go beyond a couple of paragraphs if they where describing the event/fact.
Just because some software programs misuse the NOTEs area, in their reports does not mean you should aid that misuse by not complaining and getting them to use the fields correctly. NOTEs are not the right place to anything but notes from you the researcher. These notes are then passed to/used by other researchers in their work. If you mix other types of information in the notes field then future readers have little clue to what is what. Book generation from FTM needs a lot of work, but book generation is a very hard process to automate, so I grant them lots of slack. The reality is that different "styles" put notes, bibliographic and other information in different places. A generic and simple program like FTM could never get it totally right. If the except warrants inclusion in the pages of the book, two places come to mind, as an indented text block in the body of the page or as page foot notes. These elements are better prepared by the author manually than an program automatically.
FTM does a very poor job of helping newbies understand what information should go where, but then I feel they don't tell users what to do because they have no clue what the right thing to do is anyway.