1)All of Pittsburgh's pro sports teams use variations of black and gold, which are the colors of the city flag. The "gold" that the Steelers currently use is not technically "gold" and, as you said, closer to yellow. However, their third jersey is a bit closer to gold. The "Black and Gold" name, however, started back when the team really did use true gold as a color, and has stuck because of the identity it shares with the rest of the city.
2) The Terrible Towel was started sometime in the 70's by the late announcer Myron Cope. Proceeds from sales of the towel and related products go to a school for the mentally and physically disabled, so this helps its appeal. The towel is also one of the first so-called "rally towels" so it is a point of pride for the organization and its fans.