The second your opponent puts down a rhino with their warlord in it your plan seems fairly moot. 4 blasters will most likely not crack a rhino turn 1 and in all honesty the combined shooting of your entire army wouldn't I believe. However I don't know what other armies look like at 500 points so if you aren't expecting transports then this might work. On to your questions
1. I'm not sure that flocks are worth it without a beastmaster. If you lose even 1 base you're losing another whole base or more in the moral phase on a 4 up. Another thing to note is that although you're mitigating the damage taken in moral by splitting the units up, you're also increasing your drops and the likely hood that your opponent gets to go first. Which for a list that's designed to get no mercy seems counter intuitive, as if your opponent can focus even the smallest unit of flocks and kill it off, first blood is gone.
2. I think I'm right in saying that the mandrakes will do 5.555... wounds between the 2 squads in shooting against MEQ. So if 10 man tactical squads are a possibility then be wary. You'll have to commit all of your shooting to them including the blasters to have a chance to kill them.
3. Probably? You're spending 195 points on the unit including the venom, which I think is a bit steep for 500 points. It's good that it puts guys on the board for the sake of objectives though I suppose.
I think if the stars align you definitely have a chance, but if your opponent is remotely aware of the danger of no mercy or just doesn't leave their warlord exposed you're going to struggle.
In all honesty, If I was playing 500 points I would probably consider a list like this:
X2 5 Kabalites
Obviously it's a much more traditional list and is nothing close to what you've started with, but it gives you a lot of advantages.
1 Reduces number of drops drastically, as all the units are vehicled up. You only have 3 with this list, which means it's more likely that will get first which I think is critical at this points level.
2. You keep the same amount of blasters, except one now hits on a 2+ and you gain a dark lance to help you hit enemy vehicles.
3. The damage output from shooting is very comparable, as you have 44 splinter shots when you have all units in rapid fire range, which by my Maths does about 1.6 wounds less than all the anti infantry shooting in your list against MEQ. Slightly worse, but you get a dark lance for your trouble, which if you want something to snipe exposed warlords definitely isn't a bad shout.
4. Vehicles are very survivable and two of yours are hard to hit and the other has a very respectable wound pool. This means it's going to be difficult for your opponent to get to the meat of your army, score points for kills, get to your warlord, stop you claiming objectives. If they can't kill your Venoms chances are you could very easily win the objectives game.
So personally I would go for a much more traditional list at 500 points, as I feel that there's not enough of a guarantee that you can achieve no mercy, as it will be difficult to get first turn with the current list and hard to get first blood considering you have a few units that are quite susceptible to being picked off.