Firstly, this should probably go in the Quick Questions, Quick Answers thread.
1) Events will happen, you'll know them when you see them. Shit like The Pope wanting control of a certain area but the Patriach claiming that he has no right to assert himself there. These events will happen occasionally until somewhere around 1000-1060, the split will occur. This does not happen if a supreme patriach is appointed, if The Pope doesn't control Rome, or The Patriach does not control Constantinople.
2) I think it works on De Jure territory - too little of the De Jure empire owned and The Pope tells the title to die, so it does. Since every time a ruler dies, every vassal has the choice to leave (I think), this can happen quickly if the Karlings don't get their shit together.