Two bathroom questions:

1) Is it ok from a code perspective to have a GFCI outlet INSIDE a
medicine cabinet?
The cabinet is NOT recessed, and Ive removed the back.
So basically we are placing the cabinet, opened at the back, over the
finished (drywalled) wall/GFCI.
All other outlets (well the only other one) in the bathroom are
downstream from this GFCI.

2) We have an old house. The entire upstairs (2 bedrooms, 1 bath) was
on a single, ungrounded circuit (with this ugly cotten (i think)
sheathing, which is basically falling off the wire - ug)
We are ONLY redoing the washroom (at this point).
The plan is run a cable up through the wall from the main panel
downstairs and add a small subpanel (2 breaker) with a kill-switch (or
whatever you call it) in the bathroom. This sub-panel will be located
in a small closet.
The expectation is that if/when we re-do the bedrooms, we now have an
avalible circuit for them easily.
My guess would be this panel can't be in a closet. I'll check this
with the code book, but thought I'd ask here to get peoples opinions.
Any other major gotchas you see with doing this?

Thanks!