Both variants are used. Duden for example recommends capitalization, but allows both. (It's rule 72.4 if the link doesn't work.)
I'd say "vor Kurzem" is the more modern variant, since it was introduced with the "Rechtschreibreform".
Capitalization is possible when an adjective is declined,
or when you use it as a noun in some other way (in this case there's an additional proposition).
"Gut und Böse" would be an example without declination.
Yes, you can nominalize almost all of them.
One exception I could think of would be "entzwei":
Das Entzweie? Nope.
Following from that you could say that all adjectives, which cannot be used attributively, also cannot be nominalized. Attributive use of "entzwei" would look like this:
Der entzweie Baum. Nope again.
I don't know about "vor Langem", I'd recommend
vor langer Zeit
depending on what you want to say.