With the overdrive button, if the lamp is illuminated on the dash, then overdrive is turned off and won't engage to lower the RPM. By default, it will always be on (the lamp on the dash is off), so it will have been working.
28 mpg sounds about right for cruising and a bit of mixed. Should do just over 30 on a steady motorway run.
Yes, there should be a back light on the temp display, your bulbs have blown. There is a link in my signatture below on a tutorial I wrote for taking the panel out and changing the bulbs. Any problems, give me a shout.
As far as the stereo goes, no idea why the dolby button should need pressing, that isn't normal.