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1) I have a mod that uses alternate menu gfx: pak0.pak/gfx/mainmenu.lmp, conback.lmp etc
These dont show up in joequake, instead the newer joequake .png menu gfx appear, although all the other mod gfx appear
this is normal. It loads the hi-res menu graphics by default. Use -no24bit at the command line so that the engine won't load those pics. The problem with it is that you won't get any hi-res textures, images this way. Another possibility is to delete (or rename) the gfx dir from joequake's pak0.pak to get the images not to load.
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2) Odd blue transparent squares around underwater explosions, eg rocket or grenade. Looks like something's not showing up right...
What explosion do you mean exactly? normal, QMB or Quake3? joequake got many of 'em... the best would be a screenshot about the problem.