I am Pakistani national resident in China working on z(residence permit) and married to Chinese national.

You need one also, so it is ok for you to send your application directly to HK imigration department or apply through a local travel agency.
For the question No.2, it is almost impossible to get Chinese citizenship even though your wife is Chinese and you have worked there for more than 5 years. And also the government is reluctant to issue D type unless you have great investment or else. Anyway, you can have a try to submit your application to the Ministry of Public Security of China. Once you get Confirmation Form for Foreigners Permanent Residence Status, then it is easy to get D as well as residence permit. D type issued to permanent resident is something like the Chinese Green Card.