1 - Yes, if you want more buttons need reconfigure JoySetup to add more lines and columns, or can set in that way since the begin, can set 32 buttons and use only 4, buttons are NO circuits, so if you dont press then dont make difference. Bu reconfigure JoySetup is easy and fast.

2 - Diode 1N4148 is need if you want use Diode Matrix, not for Shift Register.

3 - Each Shift Register IC handle 8 buttons, so the IC count in your PCB depends on number of buttons wanted. A Shift Register board can be chained in the next.

4 - Making then. In Sparkfun are a Shift Register board based on 74HC165, but I dont know if work "PnP" in MMjoy2.