Interpreting wedge between MP and wage
You are right that for $|\epsilon|\leq1$, you would have issues with the wedge. However, this cannot occur in equilibrium, so it is not a problem.

Both your questions stem from the same issue. I will illustrate it for monopolists, but it is analogous for monopsonists.

First note, elasticity is not constant (except in the rare case of a constant elasticity of demand function). The elasticity of demand varies across the points on the demand function. In some regions it is $|\epsilon|&gt;1$ and in others it is  $|\epsilon|\leq1$. 

Second, note that the monopolist chooses the point on the demand curve, that she operates in, unlike under perfect competition.

It is a well known result that monopolists optimally only choose to operate in the elastic region of demand. This is because, if they are in an inelastic region, then in response to a price increase, demand is reduced proportionally less than the price increase. In such a case, the monopolist can increase its profits, so that cannot be an optimal price. The profit maximizing price chosen by the monopolist is always in the elastic region of the demand curve.

This means that $|\epsilon|&gt;1$ always holds for a profit maximizing monopolist and the wedge is always positive.