Quote: (1) If we revoke their H-1, are we still required to pay full wages if our clients say they do not currently have a project for our employees?
Ans. You are not required to pay "bench salaries" for employees whose H-1 are revoked (remember you must inform CIS and offer employee a one-way ticket home). But we then have exposure to the questions, "do you still have a "permanent" job for them?" If the answer is no, then their GC processing can be interrupted unless they use AC21 portability.
Quote: (2) Do we need to notify anyone about their GC process and let them know that they are no longer working for us?
Ans. There is no such requirement, but the better practice is to write to CIS revoking the I-140.
Quote: (3) Can we re-hire them on their EAD after few (or several) months once they get a project on their EAD?
Ans. Yes, but the question about "permanent job" remains.
Quote: (4) Can we continue their Medical Insurance (and our company pays for it) even if they are NOT employed with us.
Ans. I can see that as objectionable on several grounds.
Quote: (5) Can they stay in USA if I cancel there H-1 and they have a valid EAD but they are NOT employed by anyone.
Ans. Yes. Have them review the entries on my blog under I-485. You will still have unanswered questions about "permanent job."
Quote: (6) Is there an alternative for them to apply for Consular Processing, under what circumstances should they do so, what are the benefits / disadvantages
Ans. I see no advantage in CP. The basic question about a permanent job remains unanswered.