1 - Are there any differences in display and volume between the rectangular display and the in panel display?
Yes, the sounder in the 57mm version is louder. This is mainly possible due to more space.

2 - Is it possible in next release to remove volume limit for Powerflarm bricks?
No, this is a hardware thing.

3 - Can the manual be updated to explain the various elements in the display for all possible alerts? I am still not clear how ADS-B traffic is displayed.
Yes, we further improve the manual. Basically all traffic (with available 3D position) is displayed in one way (which is small arrows if a target flies straight or a blue circle if a target circles and climbs). The latest version manual already points that out.

4 - There seem to be a bug which result in the latest call sign received continuously showing on subsequent alerts including Mode C alerts, long after the flarm target is gone
This is not a bug. The display always keeps the last selected aircraft selected, even if the target comes out of range.
The reason: E.g. you select a teampartner and he gets out of range. Every time he gets back into range you don't want to have to re-select him.

6 - The polarization is such that the display can only be read in vertical mode when using polarized glasses. Any plans to provide a horizontal polarized version?
Unfortunately this it is not possible for us to change display polarization..
Most polarized glasses filter horizontal light, in this case you will have to use the display vertically to read it. Some glasses also have different polarization angles, therefore also some require "landscape" use of the display.

7 - Instead of the long chirp for nearby PCAS alert (added in latest butterfly version I believe), is it possible to change it to a series of short chirps, similar to the MRX? Even with the low volume, I find the continuous long chirp while thermaling with another transponder equipped glider a bit distracting.
Sure this is possible, I'll add this to our wishlist for the next release.

8 - Does butterfly implement some kind of filtering which prevents targets from disappearing momentarily due to loss of signal? This seem the case when comparing to the flarm radar in XCSoar for example.
Yes, we keep a target active for some seconds ( eight seconds) after losing reception (ADS-B and FLARM only).

Hope this helps, best regards
Marc