No. Any course, either in-class, distance, hybrid or self-paced is eligible. All you need it to use one of the Sakai tools for a part of your course which is offered by an accredited education institution (K12, College, University, etc.).
No. What the award focuses on is innovation at large. If you implemented a great idea to enhance student learning and feel like you might need to improve in some other aspects, please do not hesitate to submit your application.