I think that the way you will move forward depends on the objective of your research. I understand that your interest is the grassland land use but, in my opinion, it is important to understand if the research focuses on the land use itself (for instance, the effect of different management on grassland) or on the effects on the watershed itself as it is (for instance, how the water yield and soil erosion on the entire watershed change when the grassland management change). If you are interested in the effect on the watershed, I would leave the cropland as it is now while changing the management on the cropland.
If you are interested in the effects on the entire watershed, I would do a simulation with the actual conditions (baseline) and then I would change the grassland management leaving the cropland management unaltered. In this way, you will be able to see the impact of the watershed of different grassland management scenarios. If you simulate the entire watershed as grassland, it might be unrealistic but, it can also be a scenario answering the question "what would happen if the entire watershed is converted to grassland"?
On the other hand, if you are interested in the impact of the management on the grassland, you can even use one subarea or you can do the simulation using EPIC instead of APEX.
For your second thought, how large is the area you are simulating? If it is very large with complex topography, you might consider using the ArcAPEX interface based on ArcGIS. This will make easy the delineation process but it might require quite a lot of work to get prepare the input data required by the GIS. If you want to use WinAPEX, I would suggest drawing on paper the configuration of the different subareas so you will have an idea of how they must be hydrologically connected. Then, you can assign the correct management to each of them.
Since this topic can be quite complicated, we can continue to discuss it here so, feel free to post your questions and we can move forward in designing your simulation.