Installing railing pickets using dowel pins
To answer your last question - oak will last significantly longer than pine. It can be left untreated and will harden.

If you do use oak then dowels will be the ideal fixing mechanism as metal, particularly iron, will stain the wood.

See the answer to this question on dowel sizes for what size dowel to use.

They should be quite tight and if you get it right, there'll be no need to glue them.