The instructions mention to create a public repo. But if we use assets that we purchased I feel like we shouldn't use a public repo.  Unless there is another way around that with a public repo?

You can add the assets folder into the .gitignore file

You should definitely not commit assets that are paid to a public repo or you might get a takedown notice. You can ignore them as mentioned above, or a fancier solution but with a bit more complexity is to create a submodule for the assets that is a private repo and include that in the main repo which is public

https://git-scm.com/book/en/v2/Git-Tools-Submodules

What if I want to use a plugin or asset that contains code? It won't compile if the submodule repo would be private. is it ok?

I'd say include readme file with what paid stuff I must get on my own.

Assuming you don't modify plugin code anyone should be able to compile your game once they have it.

I also think it should be ok if your game won't compile unles I have all plugins. Would suck though :(