ok, I'm down 16" or so with a 30" hole and now there seems to be 3 large roots ~4" going more or less downwards, and maybe 7 the size of an inner cardboard paper towel roll going diag or sideways.

I have to put the baby replacement Rose Of Sharon exactly in the same spot.

I could cut the roots off near the edge of the holes, or try to pull some or all of them up and in. This may get involved. The 3 large roots are straight down - I'd have to dig down around a bit, then get tough with jacks, etc. The smaller dia. roots are sideways, some near horizontal only 9-10" down, and I'd probably create large rips pulling them up through the grass if I took that obvious route.

I also pulled up a large 10" stone so I can see how these roots can negotiate problems like that.

Should I attempt it all, possibly making a mess (I can fix, and re-fix later, by dirt stuffing), OR just cut them all flush, or as far as they dig/rip out?
I am not sure about rotting, whatever.

To pull or not to pull, that is the question.

Q1) Should I water it now? I might have asked this question a week ago when I planted it.

I cut all roots at the edge of the hole and just hope thats ok. I used 50L of "Triple Mix Plus", potting soil and black earth. It is a 20" high tree now and I used all the nice soil in the pot it came in which I cut through and slipped off when I centered the plant in the hole. Currently it is 2.2C; forcast is above freezing but it may vary and also may rain &/or snow 8 inches here in Toronto in a few days. I DID NOT water it at all yet (but we had a couple inches of snow that has melted): except for below the plant level which I did the night before transplanting to compact settle the deeper loosened soil.

Q2) Were the missing wood plugs from the old trunk from these "bugs" and should I do anything about it, like use a insect killer?

At the bottom of the hole ~22" below this lawn's soil line at the last moment I saw a bug at the bottom of the hole. About 3/8" long, like a wetted thinner red ant but It was dark in colour, like a deep brown, but not quite black iirc, and It looked like it might have had wings. Not white; so not a termite? (are all termites even white?). On the 50 yr. old ROS I removed all around the trunk at the bottom it was de-barked in area down to what looks like notches with distinct edges gouged out of the wood characteristically 1/4"w x 13/16"l x 1/8"d. Like a tiny OO shaped or gouged out oval swiming pool hole in the trunk wood. I do not know the name of these worm-hole-plugs or the bugs that I saw, or if they are related. I do have a pic of the holes, but not the bug(s) if necc.

I do not know anything about holes the bug could have made. For any concern you have of future damage the bug and it's colonly might do to your young transplant, I would simply feed it for a few seasons with the Bayer systemic bug killer for trees and shrubs.

Generally I do not like to overuse that type of bug killer, because of environmental balance concerns. Yet there are still times, such as with the concerns you have expressed, in which such a broad-spectrum bug killer promises to be beneficial.

Thanks for reporting your findings on the root development and growth patterns that you observed when recently digging up your 50 year old ROSharon. Generally, not very much rooting pattern information of such shrubs can be found, so I really appreciate the information you gave.

After getting rid of all the dirt directly underneath the main trunk unit actually there were about a dozen roots total , most were 1" +/- diag or Hozizontal and a few 2" +/- going down Vertical or diag, plus a number of smaller easy to pull by hand. I used a 18" chisel and wood backer to notch and pry out from within the sides, then packed back some dirt, and filled, packed, and watered the lower level. Having a good sharp aggresive cut both ways 14" 8 tpi toolbox handsaw was a must.

I have no place of my own for posting pics anywhere online. Is there a place I could post a pic around these forum(s) for these things: the roots and root ball, the apparently bug created holes, the type of bug I found (I have no pic of the bug actually)

BTW, most of the dozen and a half visible holes were mostly round, about 1/4"D, not oval. I was projecting what I had seen elsewhere on my pine floor in my basement, which were similar, like rivers worn away, defined edge and random but similar depth gouge like.