1) Does CS must be fully installed and operational before integrating it with CPBM? eg do I have to create and enable a zone before adding CPBM or can I do it after the ingratiation?

You can certainly create zones after integrating with CS. It does not have to be fully operational.

2) For CPBM usage - do I have to install the CS Usage Server?

Most definitely. CPBM usage & Billing relies on the CS usage server to report usage data to CPBM.