Hi @anuaneja ! Thanks for sharing your questions about using rubrics. I've tried to respond to your various questions. At the end, I'm linking to some relevant guides.
i. Rubrics in Canvas are essentially point-based, as are assignment scores. The points allow Canvas to precisely total scores across assignments. It's not possible to do that with letters.
For a fully letter-based rubric approach, you could use letter grades as achievement level names. If you enable ranges, you'll be able to manually enter a point value to fine tune where the student should fall in the letter range. I set up criterion this way as a test, and it looks alright to me (see attached screen shot).
ii. Rubric criteria don't have an option to convert to percentages.
Decimal values up to two places worked in my testing.
5 points is the default maximum value for a criterion, but you can adjust that so that the weights of your criteria are correctly proportioned.
iii. If you are using a rubric for grading, then the rubric maximum and assignment points possible should match. I believe Canvas will adjust the assignment points possible if you attach a rubric, check the box to use it for grading, and the points don't match initially.
One way to set up a rubric and assignments for grading that feels intuitive might be setting all of your assignments' points possible at 100, organizing them into weighted assignment groups so that the same types of assignments all have the same weight, and then using 100 points as the maximum for all of your rubrics. Different types of assignments might have different numbers of criteria. If 3, perhaps the criteria would be worth 30, 20, and 50 points; if 6, perhaps 10, 20, 20, 15, 15, 20... There is flexibility there to find the right combination.
iv. Canvas can display a student's score on an assignment as a letter, and it can display their course total as a letter. Both of those involve a grading schema. There is a default schema, but you may need to customize it to match your own.
v. It is not necessary to build your rubric using the Canvas Rubrics tool. If the way it structures calculation is too confining, feel free not to use it. An alternative approach would be attaching a rubric to the assignment description (e.g. as a PDF) and making reference to its principles when giving qualitative feedback in SpeedGrader submission comments.
Another possibility is putting all of the information about doing well in the criterion description, not filling out detailed levels of achievement, then always checking the "I'll write free-form comments" checkbox when attaching the rubric. That way you can write a comment, enter a precise criterion score, and not have to translate between schemas mentally.
How do I add a rubric to an assignment?
How do I add or edit details in an assignment? (Settings Display Grade As Letter is shown here.)
How do I enable a grading scheme for a course?
How do I weight the final course grade based on assignment groups?