1: I will say yes, since the feat doesn't explicitly states that the creature must begin its turn flying, it just says "when flying" (at least in 3.5, at least until the bestiary eventually changes that...). It must respect all other rules of flight during this turn though.
2: the Dragonlance Campaign Setting has more rules for aerial combat.
1. A naturally perfect flying creature begins the round on the ground.2. Can I use Fly-By Attack?
Is there a good reference on how to run aerial combat?
I don't believe the "monster feats" from the old MM are in the PRD, so there's no way I can tell what the PF version is. Therefore you can't quite get a RAW answer yet.
Fly checks are made in response to moving, so as long as you make the appropriate checks, you can be considered flying while moving along the surface of the ground. So I'd say you can use Fly-By Attack as long as all the movement you make during your turn is flight-based movement.
On running aerial combat, I think the 3.5 Draconomicon has some good discussion about dragon flight.