I've been vermicomposting for over 5 years. In the beginning I did it in a small bin, with bedding, holes for air etc.. to the letter of the law. The following picture is my set-up now which I've been using for at least 3 years now with no problems at all.
The bin is about a meter long, a half meter wide, and two thirds of a meter high. I've tipped it up on one end so the leachage can drain out through holes that were drilled at the low end. You can see the basin which collects it. This is NOT compost tea and has killed every plant I ever used it on (diluted of
course), so I pour it down the drain now, but I've read that it can be used to jump start a regular outside compost pile.
You will notice that I've divided the bin into 2 parts, one for fresh matter the other for continued consumption until the fresh side is filled to the brim. Then I empty the finished worm castings onto the screen over the bin in the background and sift them through it. Sometimes I use it moist, but mostly I let it dry for ease of use and transport. The empty side becomes the new dumping zone. I switch sides 2 or 3 times a year.
You will notice I don't have any bedding. So where do the worms lay their egg cocoons? Do you see all the specks on the side of the bin? That's them. With the lid on the bin the humidity is high
enough for the worms to climb the sides and even the underside of the lid and do what comes naturally. Worms leaving the compost is very normal. They never (ok, rarely) leave the bin.
I've never seen the types of bugs you are describing but I doubt they would bother the worms if the bugs are mainly on the surface. Usually once a year I get a fruit fly infestation which I deal with by using one of those (mea culpa) hanging fly insecticide strips. You can see the white handle of it hanging on the side of the bin. A little expensive, but it saves a lot of time and misery.
Honestly there is never an odor (good or bad) that comes from my set-up. I don't garden where I live, and there I just chop and drop so I don't have a regular compost pile anymore. But for the
city I have to say "vive la vermiculture"