In case I understand your requirement correctly, you do not want to use the popup feature of the color picker, but only have the control invisible, until the user clicks a button. In this case, I would recommend that you use a static color picker (ShowIcon=false) that is hidden by default, e.g. it is wrapped in a DIV with "display:none" style setting, and use a separate button to show/hide the wrapper DIV.
Another approach would be to re-size the dialog, when the palette opens - you can use the popUpShow client-side event in order to implement this:
Regarding your second question - about positioning the palette somewhere on the page, you can use the TOP and LEFT style settings to do this. You can find additional information about these settings on the W3 site - http://www.w3.org/TR/1998/REC-CSS2-19980512/visuren.html#position-props
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