a specific question I have is how does the snapshot/distribution agent apply snapshot to the subscribers? As in, does it copy files, thus needing file sharing ports open, or...

one instance per server, so yes default instance on each.

snapshot files will be in a folder on the distributor.

The publisher and the distributor are not firewalled between each other and are currently working together when it comes to replication.

We are now wanting to add a subscriber using transactional...