My understanding of Finasteride, based on all the stuff I've read is that because of its nearly flat-dose response and how long it takes for 5ar to build up to baseline is that taking a small amount, even every other day, should be effective. It's sold at 1mg because that's what they trialed it at. Daily because you'll run out of it sooner and have to buy more.
As for side effects probability, I don't think there's any science truly confirming it but here's the broscience:
As seen in other tests of finasteride, in animals etc. 5AR is not the only chemical inhibited by taking the drug; tests in rats showed that it can have far reaching effects on the nervous system. It seems that most assume that lowered DHT or 5AR is the cause of side effects from finasteride, but while the drug may have similar reductive effects on 5ar and thus DHT, its reduction of other chemicals may be dose-dependent. Anecdotal claims often suggest that lower doses reduce side effects probabilities while still being effective. However, it could all just be placebo effect.