The answer to your first question is yes... The agent creates a random DG name in order to mount the snap back to the node in the RAC where the RMAN session is running. It then "catalogs" the datafiles from this temporary DG as backup file copies of the database. Then the agent runs a backup of the file copies to the SBT channel (which of course sends the data to the MediaAgent). Since these are RMAN backup file copies you can only run FULL backups of these files.
In answer to your second question, there is no "temporary" instance created, as RMAN connects to the source DB to run the backup file copy. So there is no need to create or delete a temporary instance.
After the backup is complete, the files are removed from the catalog, the snap gets unmounted, and the DG gets deleted.
Let us know if this helps.
Ernst F. Graeler
Senior Engineer III