she probably had a decent chance to medal. Obviously it's her prerogative and she has to make the overall best strategic decision.
Is it common for women to compete in both, or do most pick one?
... limit to increase overall team medal count (Ethiopia and Kenya both have done that in the past).
In my view, the London time isn't that relevant. In a race like the Olympics one has to be prepared for a tactical race with a sprint finish. That would be tough for Molly to lead. She could try and take it out fast to avoid that, but then several top east Africans would sit on her shoulder and kick. And leading the race at the pace required to run the legs off most of her competitors would be draining. Since the 5K is after the 10K, she could have tried it.