Hey!
1. I would not recommend bullet pointing especially where there is no word limit for the question.
2. I think my answer was about 300 words and I'd recommend keeping it around there, if anything to force yourself to keep your writing as concise as possible.
3. I personally didn't use headings but I don't think it would be an issue if you used them as long as you're still writing in full prose.
One piece of advice a future trainee gave me when I applied was to avoid repeating yourself in the app. So if under the "why you" section of your cover letter you're using certain extra-curriculars as examples, I'd stick to mentioning completely different activities/interests etc for this question. Ultimately you want to show GR you're a person with varied interests which is something not repeating yourself achieves. Also, I applied to W&C twice in the same cycle and with the second app this is the approach I used and it ended up being successful.
Hope that helps!