No. As per the Demon Storytellers Companion (p.69):
Because of their undead nature, vampires cannot benefit from pacts of Faith, nor can they be possessed by a demon. A mortal who is bound to a vampire can be enthralled by a demon (and vice versa!), however, and she may be possessed like any other human if her Willpower is low enough.
The latter part says that a Ghoul can be possessed, but it's a bit vague on what happens if it's possible to possess a Revenant. If it is, this likely does not result in them retaining their Disciplines much like how a Demon does not have access to the Spheres of Mages and Edges of Hunters that a Demon possesses. And while Demons can make pacts with Garou, they cannot possess them so there's no potential gain in power here.
It has been a long time since I played Vampire, but - not only is it possible to do a group creation followed by individual preludes - it's the best way to do it.
You will probably need to have a gap in time between the creation session and the first Prelude. There will likely be some tailoring needed once you know the characters. But that's not a huge problem most of the time.
Character Creation for the Mechanics and the Meta
The Character Creation session should be used as a chance to have players become familiar with the system if they aren't already, and to discuss a few details of their characters to ensure they will work together and not have too much overlap.
You also have players discuss meta elements. Perhaps two players want to play rivals. They can discuss these details during this process, decide why they're going to be rivals.
Work up the full character, but I'd suggest telling players that no choices are final. Give them a chance to make changes once they better understand the mechanics and the setting.
During this part of the process, you needn't discuss more than the bare minimum of setting details. You know, just enough to make sure the characters will all fit within the premise. "You're all newly embraced kindred in the crazy world of high finance in the 1980s. Think American Psycho meets Vampire Diaries." Just enough to ensure the characters will work in your premise, and no more.
Prelude for the Setting and Story
Once you have the characters set, you can run individual preludes. This is the stage where you begin to introduce setting and story elements, and it can be run as free of mechanics as you and your players are comfortable with.
It need not be less interesting just because the characters are mortals. But making a story compelling does depend a lot on the GM. If you make the journey memorable, it will be awesome.
The last time I played Vampire, my GM did it this way. I built my Assamite, and then we roleplayed his journey from boy, to man, to trained assassin, right up to the scene where his mentor bites him on the neck and then hangs him up on a meathook. It was horrifying, and gut churning, but it was never dull. Along the way, my GM hinted at what it meant for the future.
You mentioned Initiations in Dogs in the Vineyard. As a GM, I've used this idea in preludes for other World of Darkness games (and other games) to help make them memorable. Players make characters, and then I ask them to ask a question we will answer during the prelude. This helps keep them engaged as they search for their answers.
This way will preserve nice balance between player agency and GM mystery. Players have freedom to create the characters they envision within the limits of the premise, but the GM doesn't reveal too many secrets too soon. I've played it, and run it, and it works well.
Best Answer
Your guess is correct: Yes, one can.
If you get a second dot in the discipline, you can learn either a second-level power, or you can learn a second first-level power. That does mean that you're not learning that second-level power. If you want to learn that one, you'd need a third dot in the discipline, and you wouldn't be learning the third-level power if you choose to learn the second-level power.
That house rule seems to be there to allow you to eventually learn all powers if you sink enough experience into the discipline, while the original rules would only allow you to learn 5 powers total. (5 dots in the discipline.)