I am making a California license plate this weekend and am looking for some decorating advice.

What would be the best way to make the flowers/grass at the bottom.  I was thinking to hand paint it but I have done that before.  Any tricks or other ideas?

Handpainting is what I would do in this case.  Because the flowers and grass are flat, you should replicate them in a flat pattern - such as painting - rather than flowers extruded from a mini plunger.  The focus seems to be on the blue items so any dabs with orange and green would be acceptable.  Happy painting. 

Oh boy, I don't have the answer to that question because I don't know the climate in your area.  The idea of leaving it out to dry over night doesn't take into consideration the type of fondant you use.  Some are more delicate than others.  If you're really worried, why not cut out the shape of a license plate - our of fondant - and paint on it.  Then leave to dry over night and transfer it to the surface of your cake tomorrow just before delivery.  That way you can try the painting method out without screwing up the cake and if you make a mistake, toss it out and cut out another license place and start all over.  I would place the cut out on waxed paper that has been covered in a light coating of Crisco so that it will come off the paper tomorrow.  

Hand painting that would be easy.  You could even do it on buttercream.  I don't know about waiting before you paint it.  Just let it get firm and go to town. 

You're just painting the grass part, right?  That should be easy!  Just mix your food coloring with some vodka and start with light strokes to get a feel for what you're doing.  If you're doing it on buttercream then make sure it's ice cold.  If you need to, spread some on a sheet of waxed paper and fridge it to practice.  Do the same for the fondant.  Once that dries, go back and paint the flowers on.

I would totally make that piece well ahead of time and just move it onto the cake.  That way you can work on it over a couple of days if you need to.

For the "California" lettering, I'd print out the size plate that you need using Microsoft Word or Open Office, then make a copy of that font and print it to size for the plate.  Then I'd stipple the pattern into the fondant using a toothpick or something sharp, and trace over it with red buttercream or you could even use a red food coloring pen.  Just don't stipple too heavily because then you might see the holes through the letters.