Recovering files from a Time Machine backup

If you remove that drive from the backup set in Time Machine, you can still browse it and recover files. Just hold down Option key and select Browse Other backup disks from the Time Machine menu.

It won't overwrite a drive that isn't in the backup set.

Enter Time Machine via the TM menu in the menu bar and navigate back in time to the date you want to recover from. Then navigate to the folders you want to recover, select the contents and press the Recover Button. If there's a file with the same file name as what you're recovering you'll be asked if you want to save the original, the recovered or both versions.

Would this include all the photos that migrated to Photo initially?

It should be identical. When Photos came online, it would make hard links of the iPhoto Library photos. So, the items in Photos should be identical to the ones in Photos.

I think that my last question relates to advice on whether to create a new photo library from the old Photo backup or merge the existing library on my laptop with the old backup. I know I want to avoid over-writing or losing photos from either library. What is the best approach and easier to manage?

Photos allows you to open multiple Libraries, just not at the same time. You could switch between the two Libraries and decide what to do about merging, later. You just hold down the Option key when you open Photos and it will ask which Library to open. I don't know what capability there is to merge them.

You can discontinue backups while you do the recovery but it should not matter. TM won't do backups will you're recovering files and after you do just eject the drive.

When TM needs more space it will delete the oldest backup to make room for the next one.