Don, I use a momentary on-off because I typically only run 2-3 logs through the mill and it's no big deal (for me) to hold the button down for 10 seconds, since I'm not trying to operate multiple operating accessories at the same time when I'm running my trains all by myself. If you're running more logs than that through the mill, a 364 may be better as you won't have to keep your finger on the button for so long.
Although I've never done it, I would think that you could operate the saw mill from two distributed switches. I think I know how that wiring would look, and it should be pretty simple, but I'll defer to one of our crackerjack Forum members who is knowledgeable about wiring to help you with that.
On my layout, I have separate transformer posts for my track and my accessories. On my ZWs I'll run track leads to some transformer posts and accessory leads to different posts, which prevents track power from being diluted.
I looked at the Lionel Owner's Manual for your Sawmill, and it does recommend that you place the switch in-between the Sawmill and your transformer ground post. Don't know if it matters whether the switch is paced in-between and power or ground, but I would follow what's in the manual.
Hope that helps.......I'm sure others will chime in with their take on your questions.
Ron