Long distance identification was very unreliable, the British also initially confused Prinz Eugen for Bismarck because they expected the latter to be leading German formation.
Only if you know the exact distance of both targets. Like with an air target there are not many landmarks to compare size with at sea.but i'd imagine even at long range a battleship should seem bigger than a cruiser.
I dont doubt your source, but...how do you confuse a ship with a quad turret on the front for a cruiser? I'm not sure how much of the ship was visible with optics of the time, but i'd imagine even at long range a battleship should seem bigger than a cruiser.