Q2) Is there any way of grouping the letters in the output word in pairs so that they have something in common? (in pairs, because I am guessing A1 above is for a reason!)
A2) It looks like it. If I look at each pair of letters: OQ, NP, SU, I can see that they are all letters that are near each other in the alphabet... in fact, they all have a single letter between them.