Hi Suzanna,
the thing with the head exploding happens to me too a lot of times. You go researching a topic, you start understanding it, you think you found a solution, go back to double check and end up finding a lot of information backing your decision but also a lot of clues that point in a different direction.
But it's good you found your way here and I have a feeling someone will be able to help you with your questions.
That said I think it's a good idea to stick to a tried and true solution, especially when it's your first time. I think if you stick to Art Ludwigs book you should generally be fine.
I'm not an expert on grey water systems, I just have one at home and know a bit of plumbing.
I don't know the code/law around where you live and wether you care about that or not.
Art Ludwig diagram shows a bucket used as outlet chamber surrounded by mulch. That’s not gonna be big enough or deep enough?
As I understand it the bucket is not to hold the water but allow it to separate from solids and flow into the mulch. What makes you think it is too small?
What makes you think it's not deep enough? I don't know what the Art Ludwig book says about depth and freezing. But the way I see it the grey water will come at a certain temperature, mostly somewhat warm. Also the mulch and the organic matter are going to rot/compost and produce warmth. So I can see it working.
Keep in mind that you're probably required to get the mulch (or whats left of it) out every couple of months and use somewhere in the garden, it will turn to soil.
And connection pipe to grey water outlet on the house, do I wrap that with insulation?
How big and how long is that connection? I don't think you'll need insulation, as the water will come warm and drain quickly, so there's not gonna be water that can slowly freeze in the pipe. But if you have some insulation and want to be extra sure, go ahead and wrap it in something. I also don't know just how cold it gets where you are.
Any regional experts available?
Some other things to consider:
How many people are in the house?
What type soap and other products will you use?