To get out tight knots I just pick at them. It takes a while but eventually it should get out. Also try wetting the string, that seems to help soften then up.
Yes, you can use an eraser as a counter weight. You can use anything. It might not be good depending on what you use but yeah.
Again you can use anything. When I first started I used bouncy balls. To cut a whole I used to drive a screw driver threw it, but now I use a drill.
Hope that helped!