Facebook App disabled - help

1) JFBConnect does not take advantage of the Instagram Graph API. You can disable that functionality.
2) Yes, you'll need to submit for those permissions if you want to use them for authentication. However, Facebook recently changed their Instagram terminology and no long recommend using Instagram as a login provider... they only want Facebook authentication to be used. You can use Instagram's API to get information about a user, but shouldn't be used to let them login directly. Instagram also doesn't provide the email address for a user, so Facebook authentication is better anyways. Before you submit, you may want to consider if you really want Instagram authentication on your site or if you can do with just Facebook. That may make the approval process go smoother.
3) I'm honestly unsure what your app was disabled for. The email says you were disabled because of your "Connect URL". I'd go through your app settings and ensure that every URL/domain setting goes to your site and does not have any 404/broken links.

When submitting for the normal review process (to get additional permissions from a user profile, for instance), it's usually a matter of explaining how/why you want to let the user authenticate (easier access to your site) and what you'll be doing with their profile data (storing in their profile on your site to create a community). The review process talks through the specific steps and it's pretty straightforward, but can take a little time to fill out.

For re-instating an app, I'm not sure what the process is, but if you find any issues with settings, that should make it easier to say "We found problem x and resolved it. If there's anything else, please let us know and we'll fix it too!"

I hope that helps,
Alex

Keep us posted on #1 above. I just responded to your other thread about your ideas for how to handle registration and authentication.

Thanks,
Alex