In this gun I have used mostly .361" 150gr SWCs and have used exclusively smokeless loads- 2.5gr of Unique to be exact. I have a S&W top-break that slugs at .361, and have used bullets ranging from .357 to .363 successfully, in weights ranging from 125 to 173gr. The thing to know is you can get away with a lot in this caliber in a good-quality gun if you use soft lead bullets. You can cut and fire-form cases from .38 special, but you need a pretty high-pressure load, which should be fired through a more robust gun than a top-break. Something like a Victory model. This is because the part that needs to expand most is the base- where the casing is thickest.
Remington used to make .38 S&W based on cut-down .38 Special cases twenty years ago. I know this because they would chamber in .38 Special revolvers. These bullets often key-holed out of my Victory model (which was the only .38 S&W I had then.) Personally I just bought a couple hundred Starline cases a few years back, and some of them have been reloaded 8-10 times without any sign they are getting ready to give up- one of the advantages of a low-pressure cartridge, I suppose.
I actually reload .38 S&W with .38 Special dies, using a modified (shortened) crimping die. It seems to work just fine.
As to your final question if I lengthened the chambers to accommodate .38 Special .361 bullets will work fine without any modification if you bell the case-mouth slightly in the expansion die.
The supply of those lovely .361/150gr. SWCs has dried up, sadly. In the S&W top-break I've successfully experimented with both 125 TCL and 157 LSWCs sized to .357- I make sure to use soft lead bullets, and they upset enough on firing to take the rifling nicely- both have proven to be accurate and don't keyhole. I've also had excellent results using Hornady 148gr. HBWCs, which easily expand to fill the bore.