i think your math is right, you have a 1/16 chance of being dealt a pocket pair, i think that works out to a 5.something% chance. The odds of someone else being dealt a pocket pair are probably more complicated than you make them out to be, i would think anyway, but that could be right.

and, as for advice on what i'd do when dealt two pair. i'd put out a moderate bet (just judge for yourself based on table stakes what moderate might be), say like 60 cents in a .5/.10 table, and if you get calls you're probably getting a chaser with nothing unless they reraise the river. just keep your eyes open for straights and flushes, sets are so rare if they have one let em have your stack unless they are blatant about it and check-raise a lot, AI on the river, etc.