I never apply more than one coat of primer. As long as you give it a full coat, you shouldn't need to. I always opt to apply multiple finish coats instead of multiple coats of primer because finish paint will fill more and cover better. The primer is just used to solve the initial adhesion issue. The thing about railings is that sometimes they are bolted on with a lag bolt and other times it may just be two nails on each side. If it's nailed, it shouldn't be too bad to remove. Yes, you can get Sheetrock Plus 3 at Home Depot. I like the stuff that is tinted yellow, but I believe you can only get that in 5 gallon boxes. Plus 3 is the one with the blue lid. You probably just want to smear it on over the grain with your finger and then when it's dry you can sand it smooth. The hardest part about this technique is that you do not want to push it into the deep grain....you want to sort of float the compound over the top of the grain so that when you sand, you end up with a flush surface. It's best to use a broken in sanding block to sand with as the stuff will sand really easily...it's really lightweight.

Were it mine, I'd consider having the one single railing on the right side, and on the left side I'd have either the existing two segments of railing or remove the upper section along the wall as no longer needed. Re the left newel post being too tall, I think the installer needs to verify that the railing height is adequate. The railing appears too low to me. I am not sure you understand the complexity of the installation nor the costs involved. I am of above average handyman skills, but I would never tackle a project such as this. Likely costs are in the thousands.

What color are the balusters? Are they stained? Why is he refusing to stain the handrail?

I just did this and I used General Finishes Java Gel stain and I love it.