Yes, that was a neat tenkan, but I assume that the horror stories from Tokyo travelled freely to Iwama and elsewhere.
Maybe eventually. Maybe not. Countries in the process of losing a war often adopt draconian measures towards "defeatist" speech or actions. As for post-war, I think it's quite possible that stories about the firebombing didn't circulate, although they were free to do so (consider the attitude towards atomic bomb victims, for example). An ambivalent attitude towards the firebombings and their victims wouldn't surprise me at all -- similar things have happened in many other countries, after all.