Sorry for my late reply, guys.
1) Why, when you use the moon pearl to skip from day to night or reverse, should we have it skip to midnight or noon? Why not sunset or sunrise? It seems like if you wanted it to be night so you used the moon pearl, in most situations, you'd want 12 minutes of night as opposed to the 6 minutes if you warped right into the middle.
Of course, I'm assuming sunrise/sunset are at 6 and 18, but that makes the most sense.
Your assumption is right. Why I put it at midnight and noon, is to make it more rewarding to take the long way around. Because we have a time unit, we can also have events that happen at certain hours. A very good example is Dampe's Gravedigging tour in OOT. That only happened from 9 to 12. So when you used the sun song in the graveyard you would skip to midnight and the tour was over. This made it rewarding to wait for sunset and sunrise instead of rushing to it with the Sun Song.
Here it could be similar, not to mention that you get more time during the night to do night events. Thus patience is then rewarded.
2) Should time be halted only inside buildings, or should it stop when you go into a town as well? OoT at least stopped time when you went inside a town. Which was cool because you could freeze time as the sun was setting and enjoy the twilight lighting for longer 
Well, I had been pondering whether to let time continue inside buildings. But the reason against it is that buildings can be closed and opened during night and day. Thus when a building would close and Link is still in it, would he be kicked out or be locked in? What about the people that inhabit those buildings. With towns and the overworld this problem does not really exist, because they are always accessible.
Why I still think that time should continue in towns is because it gives pressure on night time and daytime events. You could save, but you could also restart these events. It just gives a gameplay challenge. And I think stretching the twilight ambiance is kind of a none issue. I don't know how day and night will be done, but I preffer that it is done by a palette swap, with a palette for day and a palette for night, instead of an overlay that gradually becomes more opaque. The best example would be King Mob's Shadowgazer project.
Author
Topic: [Missing design] Day/Night and the Lunar cycle. (Read 10961 times)