Yup, release velocity is the speed with which a key is released. Howard Scarr's Virus programming tutorial mentions that on Virus, "Velocity off" is also affected by velocity on. Don't remember the details, and in fact, I've never used this mod source.
As for your second question, I'd go about it in a different way. Invert filter envelope polarity, set attack to zero, sustain to zero and play with decay and release times. When you get that working, maybe route velocity off to filter envelope amount and see what it does.
For the DAW software, plugin is a black box - the DAW basically provides timing information (clock, beat, sample position) and audio input, and the plugin returns its audio output to the DAW. Plugin developers and DAW developers can improve their software independently, as long as they adhere to some standard (VST in our case). They don't need to work together, unless there are compatibility issues 
, grabbed the knob and did it in a couple of seconds. However, for the workflow it is best to do everything in one place, isn't it?
