How does Dredge work with drawing more than one card?
Yes and yes.  Yes you can dredge both cards, and yes you can select which of the five draws you are choosing to replace with a dredge.  More than that, though, when you draw cards, you do so one by one.  So you could in theory be like &quot;I'm looking for a specific card.  Draw 1?  Not it.  Draw 2?  Not it.  Draw 3?  Ok that's what I want, I'll Dredge using my other 2 draws instead of drawing&quot;.
To do this &quot;properly&quot; in the most formal way, you would say &quot;I'm drawing a card and replacing my draw with CARDNAME&quot;.  Then you return CARDNAME to your hand and mill that many cards.  If you would like to dredge multiple cards in 1 action, you can shortcut this by saying &quot;I'm going to draw 2 cards, I'm going to replace those draws with dredging CARDNAME1 and CARDNAME2&quot;.  Then you return both of those cards to your hand and mill a number of cards equal to the sum of their Dredge numbers.
Relevant sections of Comprules:

121.2. Cards may only be drawn one at a time. If a player is instructed to draw multiple cards, that player performs that many individual card draws.
702.51a Dredge is a static ability that functions only while the card with dredge is in a player’s graveyard. “Dredge N” means “As long as you have at least N cards in your library, if you would draw a card, you may instead put N cards from the top of your library into your graveyard and return this card from your graveyard to your hand.”