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do I need to configure eth1 on the Compute Node as a bridge similar to br-ex on the Controller Node? Normally you don't have to. You would want to do it if that is your only way to access the outside word (for yum, ssh, etc.), but you could use your 192.168.0.1 to NAT to/from the outside.

Do I even need the Compute Node to be connected to the Public Network or can it pass the networking traffic over the Management Network? Answered above. Ideally you would want your management network to have access to the outside world directly to avoid the NAT configuration. Maybe, that's just me...

What is the best practice here as I cannot seem to wrap my head around this? I don't know what are the best practices, but this should be a good start for you: http://docs.openstack.org/kilo/networking-guide/scenario_provider_ovs.html