questions on repairing, removing color, and more.

What do you mean by you have to dye right over color removers?  You can use color removers up to three times in a row without having to do any form of dying. I personally think color removers are probably the best way to remove build up. The other fading methods dont really work on permanent hair color.

If you want to cover the stains, the best way to do it is to use a semi permanent dye. You want to stay away from anthing with peroxide for a few months as your hair seems to be brittle from all the permanent coloring.

Which bleach is best really depends on your own hair. Everyone gets different results depending on hair thickness, color, how strong your hair is, etc... we can only give suggestions as to which ones we use but they might not work well for you. I use freeze icelites purple bleach powder with sallys or wella 20-30 vol peroxide.

For your damaged hair, you might want to get some reconstructor conditioner. Most of us use joico Kpak reconstructor. It tends to be a little expensive but it is really worth it. I buy 1L bottles on amazon for £30 and it lasts me about 6 months.

Petrolium jelly is very difficult to get out of the hair so I wouldnt suggest using that. you can try using conditioner or the way I do it is I cover the parts I dont want to dye with aluminium foil or cling film. It will be quite difficult to do it on an undercut though. When I dyed my boyfriends hair, I just made sure i didnt touch the undercut with the brush but it is obviously easier to do it on another person.

You don't have to dye your hair after a color remover, and like puerkz said you can use them about 3 times. Going over your hair over and over again with a permanent color is what has caused most of the damage most likely, next time just use a semi like the ones sold here (Special Effects, Directions, Manic Panic, etc...) to refresh your color and only use a permanent or bleach to just do your roots (semis typically don't like to stick to virgin hair). Semi reds are much more long lasting than permanent dyes, stay vibrant longer, and cause zero damage - they are basically highly pigmented conditioners for the most part.

I would first get it cut, and get the Kpak reconstructor. If you're in the states check at your Sallys to see if they carry the Generic Value Product version of it. It comes in black and white packaging, says "Compare to..." right on the front of the bottle, is literally identical to the name brand, and is much cheaper, like $6 for 8oz. Not all Sallys carry it though so check if you want to save some $. A semi may stick to your hair, especially if you use a more pigmented brand like Special Effects, Directions or Punky Color. So if you still want red I'd definitely give it a shot. I would be very wary of bleaching your hair right now. If you're set on going blonde you could try a color remover on a test strand to see what it does and to make sure the added dryness doesn't cause you any damage since your hair is already fragile..

I would also get some coconut oil to get some moisture back into your hair, and I highly recommend this product:
http://www.hairdyeforum.com/index.php?topic=12305.msg142827#msg142827

It has really helped my hair before, even when it was fried and clumping off in wet cottony mush. It wont save your hair completely, nothing will, the best thing you can do is the cut that you have planned, but that treatment can really help it look and feel a lot better and make it much more manageable