Bless works only if you have valid targets still unblessed. About Sermon im pretty sure you can cast it constantly because the morale value changes with battle. So casting couple of sermon/Fanaticicsms is a good idea to keep the morale of the army in check.(especially if you are a monkey nation
).
About banish there must be a target either undead, or demon around for it to trigger.
Question 3 same answer: if you have no one to magic duel against, your mage will just cast something random.