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Lots to unpack I'll give you my few cents... btw you are referring to 1099-R but I assume you mean 1099-B.

1. By Treasury BONDS I assume you mean T-Bills.  T-Bills are specifically issued for 12 month maturity or less and at a discount, they have zero coupon and no accrued interest.  These type of instruments have specific treatment in the tax code (IRS pub 550 deals with a lot of this) and the realization of the discount flows thru to 1099-INT, not 1099-B.

2. Yes the "gain" from the discount is reflected on 1099-B in col 1f Accrued Market Discount (AMD) which flows thru to interest income in the Fed part of TT.  The state/local exemption of this component is a hot topic in the threads and actually varies by state.  I've seen a couple of posts that it is not exempt in CA.  NC settled in the courts that it is not exempt.  For VA the tax code refers to "Income derived from obligations, or on the sale or exchange of obligations, of the United States" as exempt.  I don't know the answer for NY but you should check the state tax code to see the language/ruling/guidance on this or consult with a CPA etc if there is any doubt.  Some folks are being surprised by this issue this year I think as Notes purchased at discount in the past couple of years of big interest rate moves come due.  I think for this reason, TT does not do anything to flow this AMD to the state taxes or Intuit would have to take a position on this topic across all the state tax codes.

You mentioned a muni bond in the mix as well.  Unfortunately I think the market discount on munis can be subject to Fed taxes, both at maturity and if you sell the bond prior to maturity.  A muni may also have Original Issue Discount (OID) component in the mix which is Fed exempt, your broker should be doing all that math and sending you a 1099-OID for that.  If the discount is very small this is Fed exempt thru something called the "de-minimis rule" (0.25% per year from purchase to maturity i.e. if you buy a muni maturing in 4 years at a price of 99 that 1% of discount should be Fed tax exempt.  If you buy the same bond at a price of 98 that 2% of discount will be taxed as ordinary income) - however I am not entirely clear if that only applies to OID not the market discount.  Anyway - this is why lower coupon munis trading at discounts due to all the interest rate moves, generally price at higher yields than higher coupon munis, to account for the fact the coupon is Fed exempt but the discount is not.

So unfortunately depending on the details of your muni that AMD may be correct as taxable in TT.  There is a section in pub 550 on "Market Discount Bonds" which includes munis unless they were purchased before 1993...

3. It's a great question.  I had listened to a Guggenheim podcast last year pushing low coupon munis as a great idea because they could be sold for a capital gain if the price recovers before maturity.  But I have yet to find any documentation that is the case, and folks I have talked to at Fidelity were quite certain it was not the case and this was taxable as ordinary income and something to avoid.  Pub 550 "Market Discount Bonds" states "You must treat any gain when you dispose of the bond as ordinary interest income, up to the amount of the accrued market discount".  I think this applies for T-Notes also, I have not seen this personally but I assume if you sell a T-Note it will show up on 1099-B as AMD the same way as holding to maturity and flow to interest income.

Hope this helps - Pub 550 is worth a read to see how these products are treated.