"OW5" is a term referring to "O scale, wide gauge , 5 feet". It is similar in thinking to ON3 which means O scale, narrow gauge, 3 feet, or ON30 which is what Bachman calls their narrow guage which runs on HO track that is about 30 inches in O scale, actually 32 I think. the term probably originated with the Proto-48 guys to poke a little fun at the tradional O scalers.
O scale traditionally both 2 rail and 3 rail has used a track gauge of 1 1/4 inches. This scale out to 5 feet in O scale hence the term OW% because it is wider than standard gauge 4 feet 8 1/2 inches. so most O scale 2 rail (and 3 rail) is also OW5 if you want to use the term. Most O scalers don't use it that I know.
You are right rail "code" refers to track height in 1000ths of an inch. so Code 125 is 125 thousands high which is 1/8 inch. Code 250 would be 1.4 inch. Historically most modelers used code 172 but that changed as other options became available sometime after 1950. I don't think many new layouts are built with rail that high anymore but it still probably half the height of 3 rail O gauge rail.
Probably many modelers would use code 148 for mainlines and code 125 for sidings if they wanted to use 2 sizes. some also use some code 100 for industrial track. Not too many people use code 100 for standard gauge modeling.
If you want to model a busy heavy duty line, code 148 or larger would be a good idea. If you want to model a spindly old shortline, code 125 or 100 would make more sense.
The code number does not mean all rail that is code 125 for example is the same. The manufacturers don't always make the rail the same and some brands maybe thicker and wider than others. It is workable, but requires a little fiddling to get a good transistion.
When change from from one side rail to another, you simple shim up the smaller rail to the height of the larger rail either in the rail joiner or under the ties.
I have a PRR MOW guidebook and if I remember to look I will see what it says about rail. they did have specs and the mainline was very heavy. Also the tie spacing was much closer on the mainline than on sidings.