Why doesn't Willow restor Xander's eye? Well, maybe she does, just not during the program. Remember that Willow isn't just scared about addiction. We are shown that The First has the capability of mucking about with Willow's mojo. Would you want your greatest enenmy to have a say in the magic that regrows body parts on your best friend?
Plus, as a symbolic thing - Xander is in part an Odin figure. He gives up an eye to gain wisdom. You can't just go and regrow such a sacrifice.
The First could have destroyed Buffy and gang piecemeal when Buffy was evicted, yes. But that'd hardly be the point. We aren't talking about a garden-variety bad-guy, for whom any win is considered a success. We are talking about the First Evil. For such an entity, how the win is accomplished is important. A certain style and panache are required, so taking the easy way out isn't necessarily it's first choice.
