Emulates it, which strikes me as extremely silly. The original grain is in the film itself, it's part of it, it's what the image is made of. Fake grain is just noise. Either denoise it or keep the real grain, I have no interest in fake grain.
Probably? Though I don't think those kinds of controls are exposed in most of the players I use (usually set-top box video players). Besides, if I'm dealing with a 20 to 80GB 4k copy of something that originally had grain, I prefer it still be present—if I'm dedicating that kind of space, the point is fidelity. If I'm dealing with something smaller than about 8GB 1080p, I probably don't really care what it looks like aside from preferably not having obvious artifacting, so I guess AV1 would be OK in that case, though all else being equal I'll still pick h265 just to avoid the fake-grain concern entirely.