John Glover himself submitted the idea of being shaved for real.
Lionel says he was first diagnosed with the liver ailment "two years ago". It's likely he was diagnosed while being treated from his injuries in the "Tempest"/"Vortex" two parter which would be almost exactly two years earlier (late spring, 2002) from when this episode first aired (late spring, 2004). Another possibility is that he may have been diagnosed shortly before that two-parter, which might explain his drastic decision in those episodes to shut down the profitable Smallville plant to force Lex to come back to Metropolis, Lionel wanting to more closely mentor Lex while he still had some time left.
Adrianne Palicki, who played Kara, went on to star in the failed "Aquaman" pilot alongside Justin Hartley who played Oliver Queen/Green Arrow on "Smallville." Palicki also starred in the unaired "Wonder Woman" pilot.
The image of Clark trapped in the pocket dimension is a reference to the frequently-seen pentagon shape of the Superman shield. Clark's body forms an S-shape to complete the design.
Lex tells Lionel that his speech might have affected him if "Barber's Requiem" were playing in the back. Presumably, he means Samuel Barber's Adagio for Strings, a very melancholy piece. Mozart's Requiem, however, is playing during the scene in which Lionel's head is shaved.