Hello Tony,
To answer your questions:
1) For me, the vertical mixing length model deals with the diffusion whereas the friction coefficient is a source term. They must be decorrelated.
2/ In TELEMAC, the diffusion is split for the two "directions" (horizontal and vertical), so when calculating the horizontal viscosity, TELEMAC uses the COEFFICIENT FOR HORIZONTAL DIFFUSION OF VELOCITIES if HORIZONTAL TURBULENCE MODEL = 1.
3/ I think you are right. I will discuss this point with Jean-Michel when he comes back and this default value may be changed for the next version. Anyway, you can manually activate value 1 in your case.
Hope this helps,
Chi-Tuan