When he says "not to bow extensively" he means that one should bow the amount stated in siman 113 sief 5 (this explanation is implied from Bies Yosef). However the Bach argues on this and says that by the modim said by the congregation (during the repetition) one should only bow his head a bit [and not do the full bows described in siman 113. Reason is because we only bow to not be stationary when chazan is bowing. So since not really obligated to bow you can't (as stated before that can only bow where Rabbis say) and just do a little bow to not be stationary]." People do not have this custom (to bow only a little).

One does not have to be concerned about "Hashem straightens the bent ones" (this verse is brought in Mesechta Berachot bottom of daf 12a as the source for after we bow to straighten back up at Hashems name. So how can we say modim derabanan bowed over the whole time, we should straighten once we say Hashems name) because this is only a halacha for the end of a beracha (gemara is only requiring to straighten by Hashems name mentioned at the end of a beracha not the beginning). This is evidently true because on Rosh Hashana and Yom Hakippur people who are especially careful with there actions are accustomed to straighten up (from there bow) only at the end of a beracha (this is a quote from "there"). I think what he intends to say is that the Rabbis made us have to straighten at the end of a beracha. So once you have to straighten up they said it should be done at Hashems name (to symbolically show "Hashem straightens the bent.") They also said that IF one is straightening at the beginning of a beracha he should straighten at Hashems name. So by modim derabanan, we only straighten ourselves at the end of the beracha and since Hashems name isn't at the end of the beracha we just straighten once finished. Even though Hashems name is mentioned (at the beginning of the modim) it's ok (not to straighten up because the Rabbis don't require us to straighten up at the beginning of the beracha). Another proof to this (that the Gemara only means that once your straightening you should straighten when say Hashems name but your not required to straighten every time you say his name) is from the fact that a king davens the whole tefillah bowed over even though he says Hashems name many times (must be since not straightening it's ok). The Bach quotes Rav Shlomo Luria who (argues on the Rama and) says "one should straighten a little when he says Hashems name and then bow again at the end." People are accustomed to following the Rama.

3. This should have a patach punctuation (Sefer Chassidim siman 805). In the phrase "cohanim nation," the phrase is not to be understood as "the priests of your nation" (similarly the Rama in siman 128 sief 10 clearly doesn't read it like this) because we hold the cohanim are considered Hashems messengers (Gemara has a question in whether the cohanim are considered our messengers or Hashems messengers. Similar to a king telling someone to do something for someone, where we can say he's the kings messenger not the messenger of person he's doing the act for. Since the gemara in one place concludes that their Hashems messengers the phrase can't be read "the priests of your nation," as their not our priests, their Hashems!) So this phrase should be read as "cohanim who are your holy nation." Even though the Gemara in perek hazarua (Mesechta Chulin 132b) says "cohanim are not called a nation," they are called "your holy nation" like it says in Mesechta Yoma (41b). The new Zohar in parashat Nasso Says "when one says "Yivarechecha Hashem" he should face the Hechal. When he says "viyishmirecha" he should face his right, when he says "ya'er Hashem" face the Hechal. When he says "panav elecha viyichunecha" he should face the left in order to join it to/with the right:" It's good to say during birchat cohanim "Please Hashem karav tishuat matzpecha etc." this verse contains the 22 letter name of Hashem (TZ"H Parashat Nasso and the Shelah):

4. We only say until "shalom."

5. The Shulchan Aruch implied that one should only respond "so should be His will," at the end of the chazan saying the whole birchat cohanim. Some however have the custom to say it on every verse. However people who are accustomed to saying "should be His will" after the first two berachot (and "so should be His will" after he's finished), are mistaken because "should be His will" is an incoherent statement (Bach):