I'll try to help you out as best I can from readings, other trans guys' experiences, etc., as I've not yet had surgery. As ftmax already said, there are no time requirements in therapy for acquiring a letter unless they are put in place by your therapist. In most circumstances, I would deem 1 year unnecessarily long for just hormones, and probably even for surgeries.
As for phalloplasties: you may want this, mentally, but if you're terrified of surgery then a metoidioplasty (also known as a "meta") might be your better option, since it's a lot less of an ordeal. As far as skin usage, they usually take skin from the forearm or thigh, and I have no idea if this is mostly left up to you or if it's surgeon's choice/preference/skill area that determines it. The phallo surgery is usually done in parts, depending on the surgeon and what you want done -- testicular implants, the making of the penis itself, and what I believe is known as "glans sculpting" are usually done in different surgeries, though two of them might be done in one go. It all depends a lot on the surgeon and what you actually want to have.
On a last note: whenever you have surgery, there WILL be scarring. It might not be prominent forever, but worst-case scenario, your scars could become hypertrophic and be raised and pink for a long time after surgery. This is often not of any fault of your surgeon's, and just has to do with the way your body reacts to the surgery and/or healing process. If you're flat enough, your top surgery scars might be minimal, as you'd be better suited for peri-areolar or keyhole methods of breast tissue removal. If you have double-incision or t-anchor methods performed, your scarring will be far more noticeable. Basically, the bigger the chest, the more invasive the surgery. Phalloplasties will definitely involve scarring, mostly on the arm or thigh you choose to use as a tissue source. A lot of guys like to get tattoos, so it's less noticeable, over the affected surface.
Keep up the reading, too! There's always tons of posts out there of guys getting their surgeries done. A good place to look might be tumblr, if you're on there; try the 'ftm' tag or other tags relating to the surgeries you're considering, or just look up blogs from various trans guys to see how their journey unfolded.