You are correct I would run some sort of bubble trap in the inflow. I use a
filter sock insode my bubble trap that works very well however others won't like the sock as it requires changing every couple of days. Since I have never run Bioballs I will let others comment on them further.
Yes in this case the live rock would just sit on the bottom of the tank. I Can send you some pics of how mine is set up but I have yet to figure out how to post pics on the board. Perhaps there is a self help post out there I should read.
In mine I have mircle mud in my refugium and my sump runs bare bottom. Lots of live rock in both.
In your picture the water level will drop in the lowest point of the sump which as water evaperates will be the return pump section. There are lots of options out there for good auto topoff systems. I use a Kent float valave and a gravity fed jug of buffered RO water. Auto top off is a significant benifit of a sump IMO and there are lots of good options for your design. The float I use requires a hole in the return section so I doubt that will work out unless you decide to drill your 29.