In terms of Kashrut standards in Israel, is it fair to say that the Mehadrin standards are stricter than the Rabanut standards? If so, should one choose a product or restaurant that has a Mehadrin hechser over one that does not?

Mehadrin standards are generally higher. In Jerusalem has a mehadrin division and a regular kashrut division. Many organizations only give mehadrin hechsherim. However, within the mehadrin hechsherim there are variations as well. Its a good policy for restaurants especially to look for a mehadrin hechsher, but that doesn't mean that non mehadrin is not kosher.