I played a fair bit last night with a friend of mine and we both managed to get multiple rockets up into orbit, no unusual wobbling experienced. Do you experience the same wobbling problems in single player with this mod set, if so try uninstalling FAR and trying again (that seems like the most likely thing to cause wobbling, apparently FAR is more unforgiving in this version).
As for the little rockets raining down I expect that a reverting thing. If you revert when you break up there are now two copies of the rocket on the server, the old (completely uncontrolled, breaking up) rocket and your new one. So my guess is it's probably the debris of your previous launch raining down!
I'm going to be out this evening (leaving now, back in about 4-5 hours), so I'll look into this in more detail when I get back.