My youngest son is currently a Rat at VMI on a national 4-year Army ROTC Scholarship (Class 2020+3). My oldest son is a Class of 2018 grad of the USMA at West Point, so my wife and I have twice-experienced this application and decision-making process.
Attending VMI was "Plan B" for my youngest son, after not receiving an appointment to West Point (Plan A). In addition to VMI, he also applied and was accepted to Citadel, Norwich, and Texas A&M (TAMU). With regard to your questions above (MNRC2018), my VMI son's experience has been as follows:
1. Army ROTC Scholarship: He completed his online application prior to the 1st Board deadline. He did not receive a scholarship after the 1st Board convened (notified that his status was still "Boarded - Under Consideration"); he received a 3-year scholarship notification after the 2nd Board (on 1/25/19); he was later notified that he had been upgraded to a 4-year scholarship after the 3rd Board (on 3/28/19).
2. West Point: My son received his rejection letter (TWE) from USMA about a week after notification of his 4-year AROTC upgrade, though the rejection letter was dated 3/20/19. He was a very qualified applicant and very similar on paper to his older WP brother (Eagle Scout, Boys State, USMA SLE attendee, varsity athlete, excellent SAT score, 20 hours of dual-credit college classes, etc.) and had received both a Congressional and a Senatorial nomination, but unfortunately did not receive an appointment. We were somewhat surprised and disappointed, but glad we had a good Plan B.
3. ROTC College Choice: We visited both VMI and The Citadel with my son; he had attended the West Point Summer Leaders Experience on his own. He has a fellow Eagle Scout friend (a year older) who is currently attending Norwich on Navy ROTC scholarship (Marine option) who had given him a very good idea of what that college experience is like, such that we felt no need to visit Norwich. After digesting all information from our visits and the discussion with the Norwich friend, my son decided that VMI was the best fit for him. He ranked his choices as follows: VMI, Norwich, Citadel, TAMU.
My son chose VMI in the end because he wanted a military college environment where all students were cadets living the military lifestyle (like at USMA); this easily eliminated Norwich and TAMU from consideration (in addition, TAMU was just way too big for him!). Norwich would have been the best financial choice, in that they offered enough in local scholarships to cover all expenses that were not covered by ROTC! He chose VMI over The Citadel for reasons that were important to him as an individual, so it was a subjective decision rather than objective. Fortunately he has received some outside scholarship money to supplement the ROTC scholarship, so out-of-pocket cost is about $5K per year for us at VMI. It would have been approximately the same cost had he chosen The Citadel.
4. Hotels at VMI are really not a problem at if one plans ahead. We had no problem getting a hotel in Lexington for Matriculation Day, but the demand is definitely greater (and prices higher) for Parent's Weekend. For Parent's weekend in 2019, we chose to stay in a hotel in Raphine over Lexington because it was much cheaper, and only 20 minutes away.
Hope this helps.