I'm not sure I understand your scope fully, specifically what is "1
lac key-phrases"?

Also, what is the difference between a "search term" and a "keyword
idea", by "search term" do you mean a term that you would enter into
your code and by "keyword idea" do you mean a term that is generated
for you by the API that is related to the "search term"?

Answers as I understand your statement of scope:

1) It sounds like you would want to use the TargetingIdeaService to
get keyword ideas and TrafficEstimatorService to get competition,
monthly search volume, approximate CPC to target.

2) Both of these services are currently available in the v201101 API
so to avoid rebuilding your application when the older services
sunset, you should probably use v201101.

3) The sandbox is to be used only to verify that your application is
making structurally valid requests to the API services. The responses
it gives back are not based on any real data and tend to be pretty
random. Only the production AdWords API services will return real
values.

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