Custom.pll and Form Personalization precedence

1.What would be the precedence if both custom library and Forms Personalization have the same set of events?

Oracle Forms Libraries first invoke the Forms Personalization, and then call goes to the CUSTOM library for the same set of events. Forms personalization will override if the same set of events are passed as that of CUSTOM library.
The first call goes to Form personalization from Oracle Form libraries so the customization done using form personalization will be effective even if same set of events are available in custom library. So in this case custom library would not effective.

2.What is difference between Form personalization and custom library?

Form Personalization is an alternative way to do the same task as done in the custom library. Form Personalization has all the common used activities of CUSTOM library.
However form personalization has its own limitation, which does not allow achieving complex business logic's.
Limitations of Form Personalization:
Form Personalization allows you to respond to a Zoom event - it does not allow you to enable Zoom on a form. If you want to do that you must use CUSTOM library - custom.pll