Quantum networks with router:external=true are external networks and are treated differently than internal networks. Some attribute values have no meaning for external networks/subnets and don't have much effect (but I'm not sure if they have zero effect). So yeah, it's confusing.

When using the Grizzly OVS plugin with a dedicated bridge for the external network (named br-ex by default), you should use provider:network_type=local as the doc says. But using type GRE seems to work as you found - I think the OVS L2 plugin agent just doesn't try to manage the ports created by the l3-agent because they are not on br-int.

Also to add to the confusion, it seems that it's possible to use provider networks for external networks instead of a dedicated br-ex. So the provider:network_type vlan or flat would have to be specified. This will probably be the way in future versions.

Yes, you should set enable_dhcp=false for external subnets, but again I'm not sure if it has any effect if you don't.