DD1 was 2years 2 months when dd2 was born. We told her about dd2 as soon as we knew, mainly because I had hyperemesis, so she knew something was wrong. I have to say though, I think it worked out well because she had a long time to adjust to the idea of another person joining our family. She loved coming to the scans, and seeing the "squirmy thing" as she called it! Our midwives were really good too- they allowed her to "hold" the doppler in place, and one even taught her how to feel the baby. Gently, of course. Oh, I'm babbling on, but some of my nicest memories are of how excited she was, especially when she saw my bump move, which just about cracked her up. I don't think I've laughed so much ever!
To deal with you second point, DH and I thought the best way to avoid it was to prepare as much as possible. We got her used to talking to the baby whilst it was still in my bump, also we made a list of ways she could help the baby and me, what she could do the baby couldn't etc, basically never letting an opportunity to tell her how great she was, and how much we valued what she could do pass. I was most worried about how I would fit in breast feeding and coping with dd1's demands. For us we marketed it as a special time to sit down and read a book together, whilst we just let Olive get on with it. We dealt with any negative behaviour in much the same way as we normally would, and tried as hard as we could to emphasise positives.
I remember worrying about not having enough love for both girls. I felt that if my love was like a pie, everyone would end up getting a smaller slice, and that wasn't really good enough. But, do you know what? My pie got bigger overnight, and I can't explain how. I just know that as soon as dd2 was born, I loved her as much as I did when DD1 was born.
Sorry for the ramble and welldone if you got this far!