When to heat oil in dutch oven?
Part one:

Yes, put oil in first then put on a low/med heat.  Generally cast iron should be heated gently,  depending on your stove it should probably take about 5 minutes to get to a good temperature.  The oil shouldnt evaporate - I've never experienced this.  As to the type of oil - I use various depending on circumstance vegetable or olive usually.

Part two:

I generally shake the pan gently - when the oil becomes more less viscous (more runny) then it is at a good temperature to start cooking.  You can also put something like a small piece of onion or bread into the oil - if it starts bubbling and generally cooking then its good to go.  Some people use a couple of drops of water to see when it spits but I dont like doing this partly due to the safety factor and also due to the fact itll splatter over the stove top.

It depends a little on what you are cooking - if you are looking to brown some meat for example you'd probably want it a little hotter than if you were just going to make vegetable soup.