1) So should this be 'smaller than or equal to', and why is it important?
smaller than. see: http://www.postgresql.org/docs/7.4/interactive/install-requirements.html
2) Is Bison actually required? Does Postgres link to the libraries or something?
There are shared libraries in the system. Based on the above link, it looks like bision is included in a tar file release.
Postgres 7.4 *requires* bison 1.875 or higher. Postgresql will error if you try to build it, and the minimum version of bison is not available.
