This is a multi part question.
2)Was wine able to be used in such a widespread manner or was it replaced with a more readily available substitute?
Communion wine for the Catholic congregation was actually not the norm for a large part of the second millenium. The 1281 Council of Lambeth ruled that consecrated wine was only for the priest, and that the congregation may have unconsecrated wine . At the Council of Constance (1414-18), it was ruled that for a priest to give the laity communion in both kinds (i.e. any wine) was an excommunicable offence. This was only reversed by Vatican II (the Second Vatican Council) in 1965.
Communion (using bread) also used to be relatively infrequent in the Catholic church, as in Protestant churches. It was only in the early 20th century (Pius V's Sacra Tridentina Synodus, 1905) when Catholics were encouraged to take communion frequently, on every attendance at mass, or even daily (and again, until Vatican II that only meant the bread or wafer).
There was concern in the later nineteenth and throughout the 20th century about communion wine and the potential for infection. Some members of the public worried, some medics advised precautions or that it was not a hazard, clergy advised that it should not inhibit the taking of communion. In the 1980s when the public did not fully understand the mechanisms of transmission of HIV/AIDS, interest in the topic reappeared. The references at the end of this paper show writings from both clerical and medical sides up to the mid-90s.
Pellerin and Edmond (2013) summarise some earlier findings, in ['Infections associated with religious rituals', International Journal of Infectious Diseases http://www.ijidonline.com/article/S1201-9712(13)00187-2/fulltext#sec0020:
The capability of the chalice to spread infection has been debated in the medical literature since the 19th century when Forbes and Anders hypothesized that contamination from the mouth may lead to bacteria in the wine.19Since then four experimental studies, a review, and several opinion pieces including one from the CDC have been published that discuss the infection risk of the chalice.
The risk of infection depends on several factors including the bacterial or viral load in the communicants’ saliva, the ability of the organism to withstand the antimicrobial properties of the gold/silver chalice and the alcohol content of the wine, the linen cloth used to wipe the rim, and the recipient's ability to destroy any pathogenic organism. Examples of potential pathogens are those that are transmitted via saliva, oral/labial skin lesions, fecal-orally, or droplet and airborne routes.
In 1946 Burrows demonstrated that when human volunteers shared a communion cup, with instructions to get as much saliva as possible on the rim, bacteria were recovered in small numbers.18 In 1967 Gregory showed that in a more realistic simulation of a communion service, various species of bacteria could be recovered from the cup, including staphylococci, Neisseria species, beta-hemolytic and non-hemolytic streptococci, and Micrococcusspecies.18 In 1967 Hobbs and colleagues performed experiments that concluded that silver and wine may have antimicrobial properties. However, the time interval between each communicant drinking from the cup, which is typically less than five seconds, is not sufficient to cause a significant decrease in bacterial counts. They also found that rotating the chalice was ineffective at decreasing colonization; however wiping the rim with the linen cloth decreased bacterial counts by 90%. All studies concluded that the risk of spreading disease cannot be excluded but is extremely low.
In 1993 Furlow and Dougherty swabbed silver and pottery chalices before and after eight services. They cultured potentially pathogenic organisms, such as Staphylococcus aureus, Haemophilus parainfluenzae, and Moraxella catarrhalis. They concluded that individual cups (challicles) should be used to eliminate infection risk.
Finally, in 1998 the CDC reported there had never been an outbreak of infection related to the communion cup.23They referenced a study from 1997 in which 681 participants who drank daily from a common cup were at no higher risk of infection than those who participated less frequently or who completely abstained from Christian services. They concluded that it is probably safe to participate in services where a common cup is used, with the caveat that any member of the congregation with active respiratory illness or open labial or mouth sores abstain from partaking.
In conclusion, there is experimental evidence suggesting that sharing a communion cup contaminates the wine and cup. However, there has never been a documented case of illness caused by sharing a chalice reported in the literature.