There is a pen/eraser toggle icon on-screen in the Notes application. Hm, and I don't have any problem drawing right up to the outlined boundary either. No distortion or fading. Is yours not showing the boundary a little out from the left, right, and top?
I also have no trouble selecting zoom. The only hassle is finding a completely full page to select from so I don't set it for an incomplete page and have it cut off text when I hit the truly full pages.
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