If you have External routes you need to let the database know how to access them, even though you are only using area 0.
If you only have area 0 you won't see an LSA Type 4, you are right about that, you can disregard the generation of type 4 as you ...
You are receiving a Type 4 LSA for that device. If you were to advertise that router-id inside the OSPF process, you would see an LSA Type 1 (or even a 5 depending how you are advertising it), but you would still need to know how to access an externa...
You do not need the IP used as the router-id / advertisement router to be reachable.
You can check if that device is reachable by checking show ip ospf border-router.
That's a tough question on how fast you should monitor it, I guess the answer would be as fast as you want it to failover. The most common I see is usually 5 seconds (This changes how quickly you send probes on links with actual data, so more things ...
