Without reviewing the service file myself, I can't answer many questions. The commanding officer's name was James R. Howard, originally Lt. Col. of the 11th Alabama Cavalry Battalion. When enough companies became available to form a regiment (ten), Howard was appointed Colonel of the 3rd Confederate Cavalry. I am assuming that Howard received the War Department's appointment because he was the senior officer in this command.

The date of enlistment is evidence that McFarland was drafted. Needing as many men in the army as possible, the Confederate Congress passed a law on April 16, 1862, which required most men between the ages of 18 and 35 to enroll. If not enrolled within thirty days, men liable for military service would be arrested and taken to camp. This man beat the deadline when his company entered service on May 16, 1862.

You asked about regimental activities. Here is a record of events for Company "A", which would be fairly similar to those of other companies --
http://www.geocities.com/bourbonstreet/delta/3028/3RDCAV.HTM
During much of the war the chain of command for this regiment led to Major General Joseph Wheeler.

I would have to look for myself, but it sounds as if McFarland deserted from his regiment and went home. Evidently Federal soldiers picked him up as a Confederate deserter. Otherwise he would have been sent to prisoner-of-war camp north of the Ohio River. This man was allowed to take the oath of allegiance and remain north of the Ohio during the war. As a deserter he would not have been eligible for a state pension in later years.

You asked about what conditions and events might make stories about North Georgia believable. Without offering too much detail, here's my best shot. You know personally how difficult married life was for the wife of a soldier during time of war. Now imagine that you and your children were living in an actual war zone at that time. At any time, night or day, soldiers from either side might come to your house and you could call no one to help. The same would be true of lawless persons or neighbors who might bear a grudge against you or simply might want to take what you had to feed their family.

During the war life in many parts of the South could be enough to drive anyone a "little looney." Actual events such as breaking and entering, theft, arson, assault &c. weren't usually reported because civil authorities could not respond to all these incidents. You'll probably never know what happened to her.