To address your first question, the Shulchan Aruch HaRav Orach Chaim 24:4 quotes the Magen Avraham 24:1 (who is quoting the Kitvei Ha-AriZal) to the effect that when one gets to Parshat Tzitzit one should hold the Tzitzit in his hand and look at them until he gets to "נֶאֱמָנִים וְנֶחֱמָדִים לָעַד". Then he should kiss them and remove them from his hand.
...וכשיגיע לפרשת ציצית יקחם בידו הימנית ויביט בהם ויהיו בידו עד שיגיע לנאמנים ונחמדים לעד ואז ינשק הציצית ויסירם מידו
The Kitvei Ha-Arizal here is referring to Pri Etz Chaim The Gate of Kriyat Shema, The World of B'riah Chapter 26 and 28. The Kabbalistic reason to drop the Tzitzit after "נֶאֱמָנִים וְנֶחֱמָדִים לָעַד" is explained in Chapter 28.
I can't say I understand it, but Tzitzit are used to build a kabbalistic "skull" out of different configurations of G-d's names. This task is completed at "נֶאֱמָנִים וְנֶחֱמָדִים לָעַד". The Tzitzit are therefore no longer needed.