You make a lot of good points. Here are my responses:
1. Yes, the film would have been better and cheaper to make if they had not changed the story.
2. Instead of Rachel Zegler or Emma Stone, Disney should have cast an albino to play Snow White, someone who actually had "skin white as snow". Then the Magic Mirror's description of Snow White would be 100% accurate, and they wouldn't need to waste time using Photoshop or makeup to make her skin white. The only value having Emma Stone play Snow White is it would make her the only actress to play a Disney Princess and a Disney Villain (remember Cruella from 2021?).
3. I agree with you that Disney should have used actual flesh-and-blood midgets.