If you must, use the 96.5/3/.5. The silver will help prevent deplating of any component leads that have silver in their plating. The copper performs a similar function in both alloys while also reducing the melting point. You can read all about it at the Kester site.
I prefer a SnPbAg alloy myself. Higher lead free soldering temperatures and extra nasty fluxes tear the plating off iron tips faster than you'd believe. Get serious about fume evacuation with that stuff too.
Yep. Opposed to lead free except for plumbing applications. 60/40 has been very common, but 63/37 is great for SMT work because the solidus and liquidus points are the same.