Hey Plate, thanks for taking a minute to write me, this is a nice and simple one
1) Your account will never be canceled because of a lack of signups, at very least it will take a little bit to make your minimum (this ofcourse can be tackled by creating your own mini sites and submitting them to other LL's like GG, etc. until yours gets off the ground. (The terms that are somewhat worded in a confusing manor, are actually in regards to a Referred affiliate, and their status to be considered active, not based on a single affiliate and their ability to obtain X amount of sales to be considered active (if that makes any sense).
2) In regards to your Brother in Law, that would be fine (because you brough it to our attention, BEFORE having him signup as a referred webmaster, without contacting us first.
If you need anything else dont be affraid to scream.