I used AP before so I can answer your first question.
When you use AP at a U.S. port of entry, an immigration officer will tear off and retain your old I-94 card (including your H-1B I-94 if you have it on the passport). You will be directed to another officer who will ask you some questions to make sure that you are the authentic holder of the AP. When the process is completed, you will get a new I-94 card with a "Paroled Until MM/DD/YYYY" stamp. The MM/DD/YYYY is your AP expiration date.
Yes, the AP is good for one year. Therefore if you use the AP , say half of a year after your AP is approved, your parole stamp is good for a duration of only half of a year.
For your second question, I am not sure about the answer. I agree that you are in H1B/AOS dual status. To renew your AOS I-94 (Parolee), I think you need to renew your AP every year and go out of U.S. to extend the I-94 date (or get a new I-94 every year).