With a western saddle there are several areas to look at: the width of the tree, is it full quarter horse bars, or partial quarter horse bars. How much withers does your horse have, what kind of saddle pad are you using, is it a thick pad, a cutback, a cutback built up. The pommel of the saddle should not touch the withers, you should be able to put your hand with the little finger on his withers and have space enough for your other three fingers between it and your saddle. Do you have someone who can look at where the saddle sits when you are in the saddle? As I said you do not want the saddle to touch the withers.
Another thing to look at how is the saddle rigged, is it a full rigging, a 3/4 rigging, a centerfire, all of these will make a difference and it is based on your horses confirmation.
As for lunging a horse, nothing will take the place of your hands on the reins. On a western horse you do not use a cavason the best tool is collection and that you can only accomplish with your legs on his back. As for a bit, I use a low port sweet mouth usually with a copper roller or spoon. Stay away from aluminum bits if you can, they will cut a horses mouth quicker then a spade bit. The average horse needs a 5 inch bit. If he is a large horse and by that I mean really stocky, 16 hands a big horse, then you might need a 5 1/2 inch mouthpiece. However if it is an Arabian it is possible that you will need a 4 1/2 inch mouthpiece.
I would go to a reputable tack store and talk to them or if you have a saddle maker near by, they can help you with fitting your saddle. Don't try to combine Western tack and English tack, the two don't mix. Totally different points of contact and riding style. I am not saying that your horse can't do both, just use totally different tack, including bridles.
Got a horse, got a dog, got God, got enough.