No, a re-index is not necessary for the Last Comment Custom Field to work.
Yes, you can modify the maximum length of the content in the custom field via the configuration page.
Yes, you need to create a custom field of type: Last Comment and add it to the appropriate screens in order to view the last comment in a custom field.
Please report all bugs at: https://capitalplugins.atlassian.net/browse/LCCF