On the first question, I agree with most of what you guys are saying.
When I watched the movie for the first time, I felt like he was asking to forget about being the father. I watched it again and I still feel like that was what he was asking the hypnotist to help him forget. He wanted to remain a lover without having to know he's in love with his daughter.
So, the hypnotist told him that he would split into 2: one, the monster, who knows that Mido is his daughter and another who will remain a lover without that burden. We assume that he walked the 70 steps and before he wakes from the hypnosis, lying in the snow, that falling to the ground could be the death of his monster and him waking free from burden of knowledge, or just a simple awakening from hypnosis.
What do I mean by a simple awakening?
If you pay attention, the hypnotist says that with each step the monster would age 1 year and die at the age of 70. This could be hypno-babble for, "walk 70 steps and you'll forget that your lover is your daughter" or you won't forget till you die at the age of 70. Personally I favor the first. It fits more with the feel of the movie since if we don't believe hypnosis works, then why do we believe that the events that took place would take place?
Everything that happened between Oh and Mido were a result of hypnosis. In order to keep their lover relationship going on, Oh went through more hypnosis.
It's all in the smile/cry, I agree.
We can't really pull anything from the smile/cry. Obviously, it can go both ways. It's a smile and a cry. So were the tears of joy that went with the bliss that accompanies ignorance. We may never know. But, the movie quotes a poem a few times, Solitude by Ella Wheeler. The line they chose was "laugh and the world laughs with you, weep, and you weep alone".
Oh will be happy with Mido but the burden of knowledge is carried alone.