I see too many questions here.
I can tell you that after two weeks of head banging on the desk you won't want to tackle representations in python without knowing what the interface limitations are and what the ins and outs are.
Let me try to line out a few things.
- lyr files are simple enough to use for symbology "IF" the schema is the same. they have worked for me for years.
- symbology cannot be kept with a gdb. (wait for it)
- representations do not use symbols (esri) they use representation markers.
- representation rules and representation markers can live in the gdb.
- there is quite a steep learning curve (IMO because of the lacking interface
and completeness of workflow capability). but I learn a little more each day.
- I don't dream that you haven't used the esri help before.
OK some facts I have learned about representations.
It takes a long time to build the rules.
If you symbolize on 1 field (not multiple) the data may be a good candidate for reps.
they cannot be created without extensive work to build a representation marker set.
even though you see representations in the symbol manager they don't use the standard esri symbol sets (of which there are thousands).
The field you symbolize on now will become a rule field which is domain type.
I will try to be clear and outline the workflow (one that almost works).
Caveat: I haven't used them on any datasets except point files.
in arcmap apply symbology to a layer.
right click "convert symbology to representation"

decide if you want to leave the geometry when editing or make it an override
also give your new feature class an alias that means something along with the rule field.
(this will become your new symbology field) (eventually you can delete the original)
In the layer dialog box, open the rep marker dialog by clicking the marker on the right pane.
Save it with a name.
continue to select markers on the left pane and save them on the right pane until there are none left.
NOTE: You should treat this a bit like db design.
Plan out all of the markers you will need.
Organize them logically and then add them all in at once.
Note where the style file is being saved when you save the marker.
Again like db design. add all your markers, then add all your representations.
This is what this is great for.
With more than one representation (for scale, or map use, or user) you simply select a different rep and all you cartography is changed instananeously!
After you get all that added, go into the arccatalog or the attribute table and look at the domains.
1. you will have 1 rule field for each rep.
2. you will have 1 rule for each marker (1 for each original unique value).
now you can go into the domain or the rep in the layer dialog and start changing the value for each rule. Give it a meaningful name.
If you go to catalog and look at the domain the you will see where rule1 = usa, rule2 = italy, etc.
There are extensive help and tutorials but some of this stuff isn't in there.
HTH