1) Yes. But be carefully to follow the naming conventions for the ispconfig database and the master/master mysql setup as described in this guide:
Especially that the ispconfig databases and mysql users on both servers are different so that they dont collide with the mysql master/master replication.
2) There are several possibilities to achieve failover switching on linux. You can e.g. use a loadbalancer siftware for that (if you use the cluster with two active node) or you use a software like heartbeat that switches the IP addresses from one server to the other one without the need to change dns recods. Changing dns is too slow for many cases, but depending on your needs dns might be ok as well.