1. yes - if you no index all but 20 pages, those 20 pages would get a boost in rankings. You would end up losing the long tail searches from those other thousands of page - so you'll need to do some cost / benefit analysis on that.
2. you'll need to do a cost / benefit analysis on this one. Are most of the visitors to your site searching in Chinese or English? Are your search terms mainly in Chinese or mainly in English? Are your Chinese speaking visitors more likely to want to visit the .zh subdomain?
You could publish 20 to 50 pages on each subdomain, and then focus on doing some link building. If you have strong rankings across those 40 to 100 pages, then you could start adding more pages slowly over time.