Mark,
The only practical way of alleviating the Col. Colt's famous, pattented disappearing rear sight is to cut a dove tail in the top of the barrel, just ahead of the forcing cone, and install a rear sight there.
Drawbacks are it could possibly hang up on a holster when drawing it, you just deastically reduced the value of the pistol and it does look a bit funky.
I did that once with a Walker and it worked out OK.
To your questions, the little screw's purpose is to hold the wedge in case it works loose. I never took it out when disassembling a pistol, just let the wedge flop there. And yes, popping the wedge with a piece of wood is a good way to knock it out. That doesn't mar the finish the way a screwdriver will. A piece of brass rod works pretty good also. When you reassemble the pistol you will need to be cautious as well. If you drive the wedge in too tight, it can lock the cylinder up so it won't turn. If you drive the wedge in almost too tight, carbon could build between the forcing cone and the cylinder face and lock it up. If you don't drive the wedge in tight enough, it could possibly work free and the barrel could come loose.
When you have the barrel off and the cylinder off, it is a good idea to wipe down the arbor and grease it well. Keeps things spinning the way they should.
Finding #10 caps was always a problem. Mainly because I just do not like CCI's. So, I usually used RWS #1075 Red Label caps and just squeezed the sides into a little oval shape and they stuck on just fine. My personal favorite was the RWS Green Label #1055 which had a slightly longer skirt and it gripped better. Sadly, they quit making them long ago. Remington #10's are the next best thing, in my opinion. They get a bad rap from a lot of poeple, but I have never had a problem with them, unlike CCI's. And some people like Fords while others prefer Chevies. And so the story goes.