1. Cycling is the process of moving out 16 villagers to be able to reclaim a villager you lost. For example, let's say Rosie moved out of your town but you want her to move back in again. For this to be possible, another 16 villagers after Rosie need to have moved out of your town before the same Rosie/a new Rosie can move back into your town. People would refer to this as "cycling for Rosie".
2. I am almost entirely sure you can't plant anything (except flowers) there. I believe houses have two buffer spaces, meaning you'll have to move your bushes one down for them to grow.