Everything you asked has been answered multiple times so all you need to do is a simple search to find all the answers including pros and cons. However I'll give you a basic run down.
-Fleece liners (if the chin doesn't chew fleece) or aspen or pine shavings are fine. Don't use carefresh since it will expand when wet and cause a blockage if eaten. Some do use a litter box, but only for peeing in, and you normally have to train them to do so, they can't control their poop.
-You want to make sure for a kit that the bar spacing is 1/2 inch or less or they can escape or get stuck. Also they aren't very coordinated when young so you want to make sure they can't fall more then a little bit (more then about a foot can kill or severely injure). Low shelves, lots of over lap and hammocks so they don't get hurt, but they do climb, so for example, it's common for people to get a double ferret nation cage and only allow access to one half until the kit is older.
-As for bedding allergies fleece would be the best, but aspen over pine if going with shavings. However what are you allergic to? the hay? the dust? wood shavings? There are options for the dust, but chins need hay, it should make up about 75% of their diet, so there is really no way to help with that.
-The number of chins depends on you, do you have time for 2? If you get two they may need to be separate at some point (fighting, sickness, injury) so do you have room for two cages? Also with only one you'll need to make sure you spend time (ideally a few hours) with it every single day, it's more important then if you had two since you will be it's only friend.
-The most popular foods are Oxbow, Mazuri, and Tradition, as well as some rabbit foods.