I grew up in community theatre, several different ones, and have served on the board as well.
1) A year is way too long to work on one show, especially if you mean rehearsing that whole time. Eight weeks of rehearsal (maybe 6-7, rarely longer than 8) is pretty standard for community theatre. Show selection and the process of getting the rights would begin a few months before that.
2) My experience with show selection has been the exact opposite of what cornflake said. Most community theatre groups I've belonged to have striven to go for large, well-known properties. You do have to get the rights, but it's easy and not terribly expensive, and if you do something obscure you may find yourself (a) with no cast/crew interested in doing it, (b) with no audience interested in seeing it and thus no chance of breaking even. The well-known shows pay for the more experimental properties, which almost inevitably lose money. (The exception would be is if your theatre group is classical/Shakespeare, but it's still sort of true, only in that case doing Midsummer might pay for doing Troilus & Cressida.) That brings me to:
3) You have to decide what kind of group this is. Several theatres I've belonged to -- particularly the small-town type -- leaned heavily on the interest of children doing it for extracurriculars. They chose kid-heavy shows like Oliver! or Annie with (potentially) huge ensembles of children, because that brings in parents as volunteers, audience, and potentially donations/fees (some theatre groups charge to participate, some don't).