Yes, the bot seems a bit... focused in rushing to combat at times.
You can also edit the bots settings for things like aggressiveness, self-preservation, etc... I think these need to be changed in MekHQ before you start the battle, or otherwise in the MegaMek deployment screen when adding a bot manually. Could be worth experimenting with.
How do you end MM when objectives are reached? I am not sure where's the manual end game. As a result, its been 'kill them all' in all of my battles.
The simplest way is to type "/victory" into the message prompt at the bottom of the screen (and then type it again to confirm). This will automatically end the battle at the end of the current round. This provides a sort of "fade to black" feel that might or might not be to your liking. If you dig the whole SW-era symbolic combat, limit destruction sort of ethos, it works pretty well from a narrative standpoint.
I've heard other people will kick the bot, take over control and manually retreat with all the units. This gives you the player some extra chance at salvage and kills. I know that the bot also has an automatic "forced withdrawal" option, but I've only see it kick in on individual units, not an entire force. I'm not sure if there is a way to do that in MM as things stand now, but if not it might be an interesting feature request.
Are units only damaged from cascading engine failures or is there a setting whereby ammo explosions would cause damage to nearby units?
Game Options -> Advanced Combat -> TacOps Ammunition
I have currently set kill XP to 1 per kill. Is that too much? Or would 2 or 3 per kill a more balance setting. I like to see my company grow in a gradual manner and not have a team of vets after only after a few years.
In my experience, if you regularly fight hordes of tanks you will be leveling up at a fairly decent rate at one per kill, even if you have vehicle crews abandoning vehicles and it not counting as a kill for whoever crippled it. Getting Regular pilots up to Veteran doesn't take long, but your mileage may vary. A couple of years can actually fly by pretty fast in the game, depending on the kind of contracts you end up on.
What is the purpose of transport and command admin?
Increases the likelihood of getting better contract terms.
I am currently playing with the stand 1:2:3 ratio. Is this a fair representation or should it be set to something more mech heavy?
I think this is mostly personal preference; for what it's worth I like it, the large number of tanks to stomp makes Mechs and Mechwarriors feel "special," which scratches the fictional itch for me just right.
But I'm a firm believer that you should never feel bad about changing things to get the kind of experience that you want to create out of a wargame, though, so if it doesn't feel right to you, change it until it does.