[bigredhdl]

1. Yes. There are lots of places that specialize in prototype level parts. 2. Your prototype vendor will be your small batch vendor too.

As for protecting yourself. Any prototype house worth anything should be willing to sign a non-disclosure agreement. They aren't in the business of ripping off their customers. That is a good way to kill their core business and spend a lot in legal fees.

Now, is your custome part a mechanical part or electrical like an IC? Your product is likely to made up of a bunch of off the shelf parts with a tiny bit of your "secret sauce". The secret sauce could be mechanical, electrical, software or some combination. Your goal at first is to prove out that part. Often this is done using develepment boards all cludged together to something that looks nothing like the final product, but demonstrates the concept. Then it is the next step to create more custom parts (PCBs, 3D printed case, etc.) so it can be prototyped in something closer to its final form.