As regards the level of PS: if you are printing to a Level 3 machine (not sure what your HP is), then do select the Level 3 only option - the PS file that is sent to the printer is significantly smaller than if you select 1, 2 & 3.
The PS savvy bitmaps option is essential if you are printing any bitmap that you have set to be 'transparent' (i.e. the fill for the bitmap has been set to NONE), such as when you might want to see the sky behind the bitmap of a buiding. If you don't select it, then you will not see (print) what is 'behind'. There is a NNA post on the subject somewhere on this site.
Personally, I have had a lot of success generating postscript files from VW 8.5.2 and having them plotted on a number of machines (I a local print bureau), includling an HP2500CP, an HP1055CM, a Xerox Xpress and even to a Canon photocopier via a Firey RIP.
I am using a Mac (OS9) and - very importantly - the Adobe PS driver (version 8.7). This is far superior to any other driver I've used and, amongst other things, it allows - via the Page Setup dialogue - the creation of a " virtual printer" for generating PS files, just as long as you have the PPD description for the device you are outputting to. Note that the Adobe PS driver and the PPDs are all free.
The only problem I've encountered relates to using an HP2500CP, and is a real puzsle - see my separate posting elsewhere in this forum.
Hope this is all of help.