Welcome to HD, mduncanhogs!
Some of your questions are answered in this FAQ:
whatifsports.com/hd/help/guide.aspx#recruiting
Of course, general guidelines are not the same as real experience. My own limited experience in D2 tells me that it's very tough to actively pull D1 players down to D2. Your budget is limited enough already that the money is better spent on players at the D2 level.
But your question about patience is also important: usually, by the 2nd or 3d day of the recruiting session, I see D1 players dropping to D2. If I've already committed myself to other recruits, it's very tough to switch targets and go all-out without running the risk of going broke. So yes, patience patience, patience :) But in my experience, it's better to let them come down to you rather than try to lure them down. It's just more efficient budget-wise.
I'm probably not the one to answer your question about distance. I watch other top D2 programs during & after recruiting, and I see some that are able to recruit nationally. I suspect that in many cases, they have (1) high prestige (2) chase 1 or 2 distant recruits and several locals. Personally, I don't have that kind of budget or prestige yet. I do most of my searching within 1000 mi of campus for now. I expect that a season will arrive when I have higher prestige and spot a good player that I need, and I can sacrifice a little quality on the rest of my class to get that one standout kid. Until then I'm recruiting for future potential, mostly, and staying local.
Your mileage may vary.