Stop poking me! Ow! I mean it! That hurts!
1) Was I supposed to get something to use as a round marker?
No. Generally one of the empty city markers is used. We usually use a water tower 'cause at least it's round!
2) Has anyone else found the empty city markers terribly annoying in that they block the colour of the city? We always use the small railroad crossing markers first to mitigate the issue, but eventually we need to use one of the larger pieces.
I think we've found it a minor annoyance, and thankfully not one that has ended up deciding the outcome of the game. Although we usually do make a point of not using the roundhouse pieces because they really are a little too big and the solid bases would probably exacerbate the issue you raise.