There are about 250 files listed in my Unused Files report.
1. Will removing them reduce the size of my output folders?
2. Must I delete them one at a time from the Project Manager, or is there a faster way?
1. No. Unused files are not copied to your output.
2. You can remove them through Windows explorer as well. And if the unused files are images, you can remove them automatically with this free script: http://wvanweelden.eu/product/image-cleanup