> Some questions:
> * why limit the number of matching transactions to 255?

Copy/paste error in the does :(

> * what does "each hash and key in the output script" mean exactly? what about the output script in its entirety?

It's an informal way to say data elements. If you insert a key then it matches both single and multi sig outputs regardless of location.

> * is sharing parts of the merkle branches not worth it?

We think probably not.