Hi,
1) Yes you can install two VMM with 1 VMM-500 license
2) If you go with 1 VMM, then in case this VMM fails or reboots, you will lose the centralized configuration capability from VMM. The 7205 will work though. Usually, it is recommended to have two VMM for redundancy purposes.
3) You will migrate the licenses from your 7205 controller to MM (it will act as the centralized licensing server)