(1) Routers need to have the interface IP address on the same logical network as the virtual IP address.
(2) Default priority is 100 points as pointed out and would be the priority assumed by RTR#2. Priority determines the preferred HSRP Active device, but priorities MUST BE WITHIN 10 points.
If a condition is linked to the HSRP process such as 'standby 1 track interface serial0/0', when interface S0/0 fails, HSRP will decrement priority by 10 points. If priority is configured as 120 vs. 100, RTR#1 would still have a higher priority and not relinquish the active role.
The default priority decremet can also be changed if needed, but 'within 10 points' is the recommended use, unless schema is far more complex.
***Please note that a higher configured priority would not increase the chances of a specific device in becoming the active device, a difference of 1 or 100 points is treated the same way by the IOS.***
(3) Preempt enables preferred router to take over active role once normal condition is restored.
I recommend you check the following URL regarding HSRP.
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