I only use live bait when running lines. It is my preference and you will most likely or never catch a flathead on cut bait unless you stick it right in front of them. Vary rarely will they hit cut bait unless it is extremely fresh IMO. If your trotlines are near Brushpiles of somesort or close to some brush near a shallow flat where they might come to feed at night it is highly likely you will catch some flatty's on live bait.. Hard to say not knowing what your fishing hole looks like.

Iv used up to a 10/0 but the 7s seem to work just fine for me. Bait seems to live longer and swim better on the 7/0 and they handle big fish just fine as long as you have them tied to the right limb that has the right amount of bend to it.