1. The title of the room is has a two word limit (no room description permitted, the title is the description). The on_describe section can have one per-room incidental message (as in TWO when you enter the room with the dog and the dog says "WOOF, WOOF". This is an incidental message that could be chained to on_describe {} or on_tick {}, it would be against the spirit of the jam to chain together many messages like this as a way of creating a longer description of a room. The limit for these messages is six words, but as Garry said, you can aim for two words too if you feel like a challenge.
2. If you update the Adventuron application (to beta 19), then the TWO theme will now automatically enforce all-caps. You don't have to use the TWO theme, and you can modify the theme if you wish.