There are many terms that you use and refer to without defining them for your readers, assuming they will automatically understand. The first of which I noticed was the repeated use of 'reality maelstrom'. You have given us a vague idea of what this might be, and your own writing and my assumptions lead me to believe that it is a large, powerful outburst of chaos leaking/escaping into reality. However, as you get closer to presenting this as a finished product remember that you need to define everything so that unfamiliar people can track what you are saying. You do seem to split chaos into two separate things, Fae which are the autonomous beings ((which I assume come from the people that were destroyed by chaos early on)), and other thingsincludingreality maelstroms. What are the options for chaos that aren't fey and also aren't reality maelstroms?
Also, are things in Chaos destroyed or broken down? It seems like things are broken down and float about in chaos until they are mushed together in unsettling ways and spat back out into reality...
Your second paragraph in your explanation to Chrono was quite honestly confusing, and even after a few read-throughs I'm not sure what you are saying. What is the "inherent problem"? What are energy cascades/their aftermath? When and how did people start interacting with, and even more so startharvestingchaos?
Hope these help.
First part: Still fleshing this part out as it is fairly new... or rather, has become more apparent that it must be more important. Thus, how exactly I deal with the mechanics are still being fleshed out. Right now, I simple know there are two (vague) forms of Chaotic anomalies: expulsion and cavitation. Expulsion being leaks, tears, fissures in Reality, and Cavitation being things formed within Choas of entities from Reality manifesting back into Reality.
As for Question two... broken down would be more appropriate.
Third: inherent problems are not defined as of yet... Energy Cascades are probably a result or a solution (or both). Finally, people, specifically those who first colonized and create the Hollow, have been experimenting, interacting, and harvesting Chaos since the world's inception. The how is through Factories, which I will go in the greater detail with later... because it is 12:30AM... and I have work at 6AM...
These did help, and are things that I have been thinking about. Specifics are wonderful, and thank you again!