I did sand (a sil9 sandblasting sand) on the bottom of a couple of my bichir tanks....I do not particularly recommend it (my other tanks were reasonably fine, polished gravel), but if you go with sand, get some Malayan trumpet snails to keep it from going anaerobic.
PVC pipe makes a very functional, if not particularly attractive, tunnel system (there are a number of good DIY articles online about covering PVC in gravel/stones, though).
A 20 gallon wide aquarium is sufficient for a small Polypterus senegalus, but you will want considerably more for a single adult (around 30 gallons), or for multiple specimens (A 40 gallon wide would work well for six P. senegalus of around 7cm-16cm, but at 16cm, you would want to transfer them to a 90-120 gallon tank.). Bear in mind that with proper feeding and frequent water changes (I am a huge proponent of 30%-50% every 3-5 days), your bichir will easily reach 25cm within a year.
Plants are tricky....bichirs are excellent at digging them up, so go with tough plants (like Anubias sp, some of the more solid Echinodorus sp.), but you need to make certain that they are very well anchored, and have the ability to root solidly (The Anubias do best lashed to wood or reasonably porous rocks to which they can attach themselves.). A few floating plants (such as the tops of giant valisineria) can create a more calm environment for the bichirs and discourage too frenetic jumping.
As far as lighting goes, go with a standard intensity lighting that will permit decent plant growth (Around 7500k) for 12 hours daily. Bichirs do not 'hate light'...they are simply crepuscular/nocturnal, so proper photoperiods are necessary.
As you surmised, any frog in your bichir tank is going to end up as dinner quite quickly (My bichirs have always enjoyed frogs as a diet item...frogs are a reasonably large part of their natural diet.). Be aware that it is easy to underestimate what your bichir can fit into its mouth...I once lost an entire school of 13 decent-sized Scleromystax barbatus due to such an error.
