Those air bricks on the house wall are there to prevent the house floor joists from rotting by allowing free movement of fresh air - ie they should be able to 'breath' fresh air
You'd lose all it's stregth if you bore enough out to accept the previous c0ck up.
I suggest you have 2 options ;
a) cut into the wall and correct the piping problem so's the elbow is sunk below the surface or
b) fit 10mm sheet of whatever over the complete wall so's the elbow ends up 'buried'...
You need to include the 1st floor plan to illustrate if any of it's walls are supported by the section you wish to remove.
That crack running in front of your hand is interesting as there has obviously been some load on the block
It might be if you're building a house. I'd have thought 200 wide by 150 deep good enough for a single porch dwarf wall and leave the existing slab as-is
There apper to be several cables (telephone/internet/tv) buried under that gravel so you really should provide a means of being able to draw these out/replace before you build over them.
First thing you need to do is completely remove all paint from a section (a couple of inches or so) so's you can see exactly what the required profile is. The professional solution is to take a pattern of the clean skirting and then spindle mould plain boards to the desired profile. However if...
Unless they are claiming you need an IP rated CU, it may be a case of the CUs they propose to use have IP ratings even though such is not actually required for the application. As others have said, if it's not being used in a situation where such is required, there is no need for an IP rated...
What you have created at present is a storage reservoir. Without a means of escape and it has filled with water it will 'overflow' as you have experienced. A French drain is only a means of collecting and routing water. You still have to develop a route for the collected water to run away...