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1. If a req. is returned, Oracle sends a notification to the preparer. If you need to expand this to include requestor or approver, you will have to write an alert.
2. If a po gets rejected and was never approved, you can NOT cancel it. You have to delete it. (I am assuming that the "archive upon" option is set to approval)
When a buyer deletes a PO, the req. goes back to the autocreate pool.
When a buyer cancels a PO, he/she has a choice to cancel the underlying requisition. You will notice that there is a checkbox called "Cancel Requisition" on the Cancel PO window. If the box is unchecked, the requisition returns to the autocreate pool. If the box is checked, the requisition gets canceled. You may have to write an alert or modify the workflow to send a notification out if you want someone (e.g the approver) to be notified.
Hope this helps,