One thing to remember about flat towing, it doesn't add as much tongue weight to the pulling truck as a trailer would and you have the front tires on the pulled vehicle making it not track as well a trailer on corners.
Also, don't forget to add trailer lights to the towed vehicle. The easiest thing I have found for this is a set of magnetic base towing lights ($25 to $50 for a set depending on where you get them). Depending on the length of the wiring with the lights and the length of the towed vehicle, you may need a wiring extension. I keep these lights and a 20' wiring extension in a box in one of my toolboxes any time I make a trip of more than about 100 miles with a trailer of any kind. It is cheap insurance to make sure I won't have any trailer light issues, as it is an emergency backup set.
In march this year, I flat towed my 90 E350 Uhaul home behind my 95 F150 reg cab long bed. I have an 70's era Uhaul tow bar that I used. I put as much tongue weight on the pulling truck as I could - to the point of bending the van bumper. My F150 is much heavier than most due to frame reinforcements, toolboxes and tools - it scales at about 5800 pounds fuel of gas. The E350 was heavier at about 8500. I was very carefull because of the push from behind. I made it with no great problems, but it did make me a bit nervous at times as it was a 150 mile trip.
City street corners are hard even with someone steering the towed vehicle. If they oversteer, it is like applying trailer brakes and it will try to slide the rear of the pulling truck to the inside of the corner. If they understeer, it is also like applying trailer brakes and tries to slide the rear of the pulling truck to the ouside of the corner.
As far as pulling the axles or driveshaft, that is more of a personal preference. If you ever notice a set of semi trucks goated together (hitch on the fifth wheel and frame of the truck in front and under the front axle of the rear truck(s), most of them have the axles pulled. Most of the ones I have seen have only used a piece of cardboard for an axle cap with half of the bolts holding the cardboard on. It does work, and they get less oil on the cardboard than you would think. If you want to pull the axles but seal it up better, use a piece of shrink wrap, aluminum foil, or aluminum tape over the open end of the axle, then cardboard, and put some larger washers on the bolts.
The few folks around here that pull stuff with floating axles alot have acquired a set of extra axles and then cut the shafts off to make proper caps. They also have PVC pipe tubes with caps to put the axles in to keep them clean and damage free.