Yes, there is a way you can opt out of the padded border. I forget how to do it, but I got mine cut right to the edge of the artwork that I did.
As for mylar protectors or some sort of lamination, it might not be a bad idea. If it was going on the playfield I'd be more inclined to have that done, as opposed to if I was putting it on a drop target or spinner. That said, though, I didn't laminate or mylar the spinner I did for my Space Odyssey, and its held up perfectly so far (~3mos). Long term wear, though? No idea.
For others reading the thread... if you need square decals measuring "22mm" (0.86") square, I'd recommend Moo.com. You can get a "Sticker Book" from them containing 90 stickers that size for $9.99 plus shipping. Moo also has a free "sample pack" you can get from them that contains "one of everything" so you can see what their stuff is like. I've got the sample pack here, and comparing those stickers to the ones from StickerYou I definately prefer the ones from Moo. Only gotcha is... Moo stickers only come in their sizes, while StickerYou will cut to your artwork. But, if you can work with the Moo sizes, those stickers feel more durable.