Allocate the maximum size when creating the backup-to-disk file. Was checked.
Best Practices says this will/could slow down the backup job.
Per my understanding this just means if the option above it is set to 2GB, then it makes all the files 2GB regardless of what the size of the backup set is. Is that correct?
This will indeed make the job that creates the BKF file run longer, but can greatly reduce fragmentation on the B2D device. Fragmentation can absolutely kill through-put. When the file is reused, since it is alread allocated, there will be no difference As far as all files at the set size, this would only affect the last BKF file of a job (see above about wasted space)
As for your last two questions
How fragmented is the iSCSI device. Is it the only device on the SCSI channel?
Not sure about the file size question. If you write data to the BKF files, do they stil show up as 2K?