If I was to rent DVC points during the free dining promotion could I get free dining? Also, would it be cheaper to rent DVC then if I was to stay at a moderate (likely POFQ) through Disney?
If you want the DDP and need a room, free dining will always be cheaper than DVC, even renting privately. You can rent and add dining for a fee. You can likely rent a DVC villa through CRO with free dining.
If you are renting points from a member, you do not qualify for free dining. I would suggest pricing a reservation with free dining and comparing it to renting the points from a member and paying for dining.
Taking the dining out of the picture (which I think is what you're asking in your 2nd question), before we purchased DVC, we rented. We rented twice and found that the cost, thought not cheaper, was equivalent to our moderate resort stays. We looked at it as bumping up to a deluxe resort for a moderate price. Now, this was years ago so you would need to do your own research. This also was staying in a studio, remembering that a studio has one bed and one pull out sofa instead of two beds.
Free dining is a program to fill rooms. DVC rooms on points are always full, whether there is a body in the room or not. If you book at DVC resort for cash through Disney Reservation Center, you can get free dining. Just not for points stays.