Halyard

The outer jacket is more to enable you or a cleat to grip the rope to adjust or hold it. Add to that that the cores have come on tremendously in the last 5 years in terms of stretch resistance while the outer jacket is still often polyester which does stretch and it;s little surprise that they get shredded. The jacket wants to move but can't because the core stays put.

I think we dinghy sailors often over engineer stuff and use inappropriate materials for the job. Polyester control lines are fine on most things, but because they are relatively cheap most enthusiasts don't use them. 

Given the slippery nature of Dyneema will it hold in a Clamcleat (Reg.TM) even with an insert?

I know Vectran is much more grippy but not as wear resistant as Dyneema.

i'd go a good 6 inches after the cleat point to account for shrinkage. It's amazing how much some of the 12 strand stuff does shrink, especially the cheap stuff - I had some pole downhauls that "lost" 20cm out of a 2.5m length!!

Stick with English Braids or Marlow and you won't go far wrong. Both of these use good quality raw material and both are now using SK78 across the range in their Dyneema products.