Not a teacher and not a native, but let's see
It is my understanding of the text that no such department has been created yet; only the proposal exists.
The would-sentence is written in "subjunctive mood" expressing wishes, possibilities, etc. but not certainties. (like you said)
The important difference: "Will" (indicative mood, i.e. talking about certainties) would indicate that a department is planned at the moment; "would", on the other hand, says that it should be planned but is not. Hope you understand...
2. in place = installed & functional, working