They fuse using an item you get after the story.
Yes you fuse Zekrom + Kyurem for Black Kyurem and Reshiram + Kyurem for White Kyurem.
They take the level of Kyurem as the level for Black/White Kyurem and his moveset.
You can't have one shiny. All three involved are Shiny locked in both sets of games. Either way,
you'd have to have a Shiny Kyurem to get the Shiny forms.
If you gain levels, I believe Kyurem gets the level boost.