Yes, you can do it, but given what you described, I don't think you should.

Even if you take it easy, you do risk a mid-air. And those trainers won't survive much more than a very light love-tap. An experienced pilot can sometimes see a mid-air coming and get out of the way, but not always.

The best way to attach the streamers is with a long string leader. I'd use at least 10 feet, maybe as much as 15 feet. Just tie the string around the tail of the airplane and tie the streamer to the string.

Unless you route the string right around the pushrod, you shouldn't have a problem. I've seen a lot of things, but I'd be surprised if you could jam a control with the streamer.

Use a light weight string, like cheap stuff from wallmart. If you can't break it with your hands easily, it's too strong. If you use that and your streamer is some form of crepe, then you shouldn't have probelms with the prop.

You won't be able to cut your own streamer unless you do one of two things. If you flat spin, you might do it, or if you pull vertical and drop right back down on top of yourself, you might be able to do it. But in a normal loop, it won't happen.

As for what can take what, it depends on the power and wingloading and tactics. I suspect the LT-40 could turn tighter if you move the CG back and bump the elevator way up. The Eagle will probably be faster.