ColdFusion Question:

Yes. If the application page directory does not have an Application.cfm page, ColdFusion searches up the directory tree until it finds an Application.cfm page. If several directories in the directory tree have an Application.cfm page, ColdFusion uses the first page it finds. If the Application.cfm page is present in the directory tree (and has the required permissions set), you cannot prevent ColdFusion from including it.
ColdFusion processes only one Application.cfm page for each request. If a ColdFusion page has a cfinclude tag pointing to an additional ColdFusion page, ColdFusion does not search for an Application.cfm page when it includes the additional page.