How to have new fields show with default content on new items?
Is it normal that the default fields will only work on NEW content items?


Yes, that is normal. 

The way I work around that to update the OLD fields: 


Go to the database and export the field table. 


For format: select CSV (do not select "CSV for MS Excel") 

Open the .csv file in Excel and make changes to the values. 


To replicate a cel fast in excel, highlight 1 cel and move mouse to the right bottom corner of the cel (cursor will change to a +), then hold down left click and scroll down. 

Import back to the DB and check-mark "replace table data with file". 
In Drupal, clear/flush the caches to see changes.