Keith,

No, you don't need the flattening stone. It might be nice if you did a LOT of honing.

Depending how not flat your Norton is, starting out with an even lower grit would be OK. I've used 220 before, but you can wear away the stone pretty quickly with this...

Going up to 1K will put a nice polish on the stone. As you've seen here, there's some debate over whether a smoother feeling stone makes a difference. I just find my strokes easier to control when the stone is smooth.

Josh