It doesn't take much water or liquid to dissolve the cure. Most recipes call for some sort of liquid to be added, soy, Worchestshire, water, etc. you can dissolve in those too. Dissolving it in a bit of liquid ensures you'll get an even cure. I usually mix it with a 1/4 cup of ice water if there is no other liquid being used.
Make sure the liquid is cold.
Yes, one teaspoon of cure #1 per five pounds of meat.