Well, one out of two ain’t too bad. At least we’re progressing. Knowing that we are working with peak units helps to answer that question. Peak, as you mentioned, can be a peak at a particular minute even though the total number of hours is less than full time. The ROG (Red Overallocation Guy) and when he appears is an interesting little factoid. It actually depends on the setting in Resource Leveling options. If you set it to minute by minute then all those tasks will turn red. If you change it to week to week you will get less…:-).
OK, the next question is “how did it happen that allocations are all over the board”. Many thing can make it happen and the easiest is when you are entering actual time. Let’s say that you have two tasks that cross a single day with a FS relationship. You enter 7 hours for a resource on the first task which sets the finish time for that task to 4pm. Then you enter 8 hours for a different resource on the second task on that same day and it has to cram the 8 hours into that last hour of availability, hence you get 800% peak units. Generally speaking you can ignore peak units. Make sure that the resources are allocated properly across whatever time frame you want (day or week, I like week). As far as the resource graph, right click on the graph and pick something else besides peak (the default). Try Work or Percent Allocation, or just play with any of them.
Hopefully this will answer the rest of your question, but let me know (I love this stuff…)