I will address these in the order you posted them.
Is there a way to remove the Static option label from the drop down list?
Yes, you can select the list in design view and click on the dyanamic button to alter the selections, the static entry will appear at the top of the list of entries that you see. You can add or remove any static options you would like from here. You can also do this in the code by selecting the select list and going into split view, you will see an option that does not have a value but has a label like this:
For the color and size options I think it would be best to have individual recordsets to populate these options. You can filter the recordsets on the product id to limit it to only certain options.
In order to get the chosen option to show correctly in the cart you will need to have additional recordsets on the page. These additional recordsets will select from the size and color tables based on the values the user selected.
As I see it now you will have at least 5 recordsets on your product page, they will be:
products, this will be to get the info for the product
sizes, this will be to populate the size select list
color, this will be to populate the color select list
sizes2, this will be to select the record for the size based on the user's selection
color2, this will be to select the record for the color chosen by the user
Look over the details here to see if you think it will work for you, if you need help with getting the recordsets straight on this page let me know what parts you are having trouble with.