2.) How could the recipients turn their crypto into cash without going through a bank? For example, if we sent 10,000 worth of Rupee to India via crypto, how would the end user convert this into Rupee in their country?
IMO the only option is peer 2 peer trading, and by that I mean direct trade / trading on the spot, not using platform like Localbitcoins. In such countries, considering they're really oppressed by the government and there's a lack of innovation, I also believe there won't be any exchange that support direct withdrawal to their own bank account.
You are 100% right about that. Countries hit harder by political instability and financial constraints are not even aware of the cryptocurrency and its need. The government knows about it of course but I think that a country has to be in good shape in terms of both political and financial condition if they wants to avail the fruits of cryptocurrency in general and coins like Bitcoin and ETH in particular.
Using crypto for any kind of real life need, must have enough infrastructure to get familiar among common people. Withdrawing to bank account or buying with local fiats will be possible only when governments stand positive against cryptos even in the case the case of being neutral also will make it difficult.