Ok the key here, for me anyway, is to make sure the dam is far in enough so that it has time to "expand" as the cake settles, without pushing through the final coat. I will say up front that I don't ALWAYS make the buttercream for the dam stiffer. Since you're a newb with existing problems with bulging, I would recommend that you reserve some BC and add more PS to it until it is stiff but still pipeable (like what you'd use for roses).
Here's what I do:
1. Level the cake.
2. Fill the bag with your buttercream. In addition to the regular American buttercream, I also use Italian Meringue buttercream, which is a meringue-based, all butter buttercream. It's VERY soft. So when I do use IMBC, I'll put that in the fridge for a bit before I fill because the butter gets rock hard.
2a. The dam is piped from 1/4 to 1/2 inch IN from the edge of the cake. In other words, when you "draw" your ring around the cake, you will see 1/4 to 1/2 inch of cake outside your ring.
3. NEVER overfill. Only put in as much filling as will fit in the dam (i.e. don't let the filling go "over" the dam). You risk blow outs and bulges if you overfill. When you fill, you can take the filling right up to the edge of the dam, but don't "dome" the filling, if that makes sense. Everything should be level and contained within the dam.
4. Let the cake settle for a few hours, preferably overnight. I don't always do this, and like I said, I don't ever have bulging issues.
Twinsfan, in your case if you decide to use the thicker buttercream for the dam, then no you won't use that for your final coat. It will be WAY too thick and it won't spread well for you, and you'll probably end up saying a lot of horrible curse words when crumbs start getting in your icing.
Even though you are filling with BC, I would still recommend the dam because it helps you learn the correct amount and level of filling you need. I always use a bag with coupler inside to do my dam. It's not pretty but who gives a care when no one's going to see it.
So yes, you will use two different consistencies: one for the dam, and the rest for your filling and final coat. Let me know if you have any other questions.