I would DEFINATELY put the baby in your room.
When you introduce the baby, this is what worked for us & it was AWESOME!!!
The day following my delivery, I sent our new baby to the nursery for a moment because my son was coming up the elevator to meet his baby sister for the first time. When he came in the room, it was just me, so I had a moment to express my love to him and answer any questions he had. (to my suprise, he actually did have questions about my belly being gone) He crawled up in the hospital bed with me and we read a book about him becoming a big brother. Then, I asked him if he wanted to meet him new baby sister. He said yes, so I paged the nurse to bring our baby. She brought her in an gave her to my son (I was helpign of course). IT WAS AWESOME!!!
about the bottle thing, I would totally forget trying to get the 1-yr-old off a bottle right now. Your children are going to need all the comfort and reassurance they can get right now and if you take that away, it may really cause some problems with him adjusting to the new baby. just make sure he doesn't sleep with a bottle to avoid tooth decay. otherwise, i wouldn't push it until the 2nd birthday. what's the hurry?
congrats on the new baby and good luck!!! liz