A1. Full backups are purged together with all block-level ones after another full backup, so in your case the 4th full backup will purge the oldest full + blocks.

A2. Looks ok to me, this is one of the more popular scheduling setups. If you want purge to happen more frequently you can schedule full backups once a week.

the 4th full backup will purge the oldest full + blocks. — Matt

In this example, would the purge occur before the 4th backup starts, or after it completes?

This could have a big bearing on local backup storage when dealing with multi TB data sets.

To answer your last question first: The purge occurs after the backup completes, so there needs to be enough space to contain two fulls plus the incremental. I run into this a lot when doing image or Hyper-V backups to the local hard drive but it is not a problem with file backups.
A full file backup is only a backup of the files that had new incremental versions created during the month. So if you have a Quickbooks file that gets modified and backed up incrementally 20 times in the month, the full backup will simply include the entire QB file again. We have over 1TB of data with over a million files and the monthly "full backup" is only about 50GB in size. That is because only a small percentage of the files on the server actually change during any given month. Files that don't change only get backed up once and never again.
So I would recommend using a custom policy setting and specify 30 days retention plus 30 days retention of deleted files. The previous month's full + 29 incrementals won't get purged until 30 days from the date of the last daily incremental, but the space consumed by keeping this number of fulls and incrementals sghould not be a problem.

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A full file backup is only a backup of the files that had new incremental versions created during the month. So if you have a Quickbooks file that gets modified and backed up incrementally 20 times in the month, the full backup will simply include the entire QB file again. We have over 1TB of data with over a million files and the monthly "full backup" is only about 50GB in size. That is because only a small percentage of the files on the server actually change during any given month. Files that don't change only get backed up once and never again. — Steve Putnam

Very well put Steve! It should be copied to the CBB docs! :-)
Are your observations relating to linux or windows backups?

The 1TB of files is on a Windows server, but now that the CLoudberry Linux versions support block- level backup, the results would be the same.
-Steve