About Oldish Coins

Should be so.
I think the banks collect worn coins (and banknotes) to send them to relevant authorities.
Coins are melted, notes are burned.

There's no set time limit for withdrawing old money. Rather, the banks (the Reserve Bank is ultimately responsible, I think) withdraw coins (and notes) once they are too badly worn or damaged to still be used. It's not something they do lightly - after all, there's no money in it for them. Our modern coinage alloys were specifically chosen to tread the fine line between "cheap and easy to make" and "lasts a long time in circulation".

As for your commemorative dollar, it's your fellow collectors and hoarders who are mostly responsible for your never having seen them before. Still, search enough coins and you can still find them, though any still circulating are likely to be well worn after 20 years. After all, with a mintage of 25 million, that's slightly more than one for every man, woman and child in the country.

Or, the one for Colorado!