Hello Jaime,
Thanks. Indeed these questions are valuable to the community.
1. This operation is for each orbital of one atom. Pi is thus a 2x2 matrix, pi is a scalar, and \vec{p}_i is a 3-vector.
2. \delta \vec{\phi} \cross \vec{p} is the viariation of \vec{p} when it is rotated along the axis \vec{\phi}.
(I take this figure from google.) When the vector is rotated from A by \delta\theta to B, you can see easily B-A has the amplitude of |A \delta \theta| , and the direction is perperdicular to both A and \delta \theta (the rotation axis can be seen as a vector).
To go from Eq. 12 to Eq.13 is indeed not trivial. We did not put the details as it has been done in several pervious work and it would take a few pages to do so.
I recommend this recent review paper which gives more detailed. (section V).
Best regards,
HeXu