Yes, I think that clicking on a spell icon and then aiming would be nice as an additional way of aiming for the future. There is a timer in the top right that stops when you die, but I agree that a real death screen would be better.
As for the upgrades, yes they are not explained very well, just implied in the tooltip when you hover an icon. Basically when you possess an enemy a second type you upgrade their spell. Eg if you already have the lightning spell and you possess a skelly it gets upgraded to longer stun and longer chain lightning. Red Lizards upgrade the fireball to have slightly larger radius, and the wolfkin upgrade the ice spell - longer and stronger slow. Now the damage also gets upgraded. You also will deal more damage when you possess stronger enemies(enemies that have spawned later). That's another thing that's not explained anywhere.