1) I'm sure I'm being blind, but I can't seem to find the description of what it means for a weapon to be a fencing weapon. Can someone point me to it?

2) I found the 'more powerful starting characters' box a little confusing. My summary is 'don't give characters five points unless you want to make a big difference, and one or two points will be noticeable.' Is this right?

I'm not sure there is a specific description of fencing weapons. I havent got the book on me but I think it is just to identify it as a different group that would need to be specialised in seperately, for the bonus fortune dice, than say basic weapons.

A weapon with the Fencing quality just relates to skills/cards that need a weapon with the Fencing quality. If you look into the description of the specific fencing weapons though they usually have the fast quality assigned to them.