How to digitise old NTSC home videos for highest quality (with PAL player)?
For VHS, the signal will be kept highest quality if you connect via s-video, so yes, you should use an s-video cable if your VCR has an s-video output.

Depending on how good your VCR is, you may get a significant improvement from a better deck.  Quality of the read heads on various VCRs can vary a fair bit and while the majority of the difference was in recording quality, there were difference in playback quality as well.  That said, finding a good VHS deck in good condition is probably difficult these days.

I'm not sure about the color correction, most likely it is something specific to your capture device.

The signal is most certainly interlaced.  Both NTSC and PAL were interlaced formats.  NTSC video should be 29.97 frames per second.  That is the NTSC standard.  The resolution should ideally be 720 by 480 using oval pixels with a .9 pixel compression.

You didn't ask about it specifically, but using a DV codec should give the maximum quality though it will also be quite large.  Once you have a DV codec capture of the VHS tape, then using a traditional 2 pass transcode to either h.264 (viewing on computer or blu-ray) or MPEG-2 (DVD) should work well.