I'm not sure if they're guaranteed to shrink. Mine aren't all that much smaller, so from my experience they may not shrink... but that may be something wrong with me, rather than a result that truly indicates whether or not testes always shrink on HRT. The scrotal skin shrinks with the testes, so you don't end up with a terrible amount of loose skin - just a normal amount of it.
And yes, you take AAs until you have no testes. As for sterility, it's variable - some people can become fertile again if they stop HRT after x time, some people can't. As for when sterility occurs in HRT... the generalization is six months, but that doesn't apply to everyone. After a year or so, though, I'd say it's a given if one's hormone levels are where they should be.