Hi
Congrats on taking the plunge in applying for your visa, I'm in the same boat, not a uni leaver but leaving on the whv in August. I stayed a lot on hostels last year and you will be surprised by how many late 20-somethings early 30 somthings are actually on the road.
In terms of picking some where to live- you can do both and you know what you-ll definitely go backpacking at some point.
You're right about the first rule- its meant to be a working holiday not a working hell!!!
Good luck