The difference between rack and pedals for me is all preference. Any FX pedal you find, you can find an equal FX rack unit, and vice versa. Usually you won't find an FX unit that is proprietary to either.
When it comes down to compression and digital multi-effects processors, equalizers, I would say that rack would be the way to go. Take for instance an equalizer. On a pedal you would have say 8 bands to play with, however on a rack you would have a plethora of bands to tweak your sound.
I have found, that since technology progresses, you can find a lot of the older gear for fairly cheap and it still does a great job, beit in decent condition. I would say nowadays if you're a careful shopper you can get a decent rack system for around the same price as pedals.
When you're hooking up rack effects into the signal chain (I'm assuming your amp) the best way is through the FX loop circuit. If you're amp doesnt have one of these I suppose you could run it like a pedal, but for me I havent had the best of luck doing that. For example, My Korg tuner doesnt relay the signal properly to the amp, so it's a tad distorted.
As for the physical size, from my experience, "rack" units are generally a standard size (19 inches to be precise) and each slot it takes up is said to be xU (where x being the number of slots). So your rack unit, assuming it's 1 slot, will be 19", 1U in physical dimensions. I have yet to see a rack unit (not obviously a 1/3rd unit etc..) that is not the standard size.
An exerpt from Wikipedia if you care to read up on it:
A 19-inch rack is a standardized (EIA 310-D, IEC 60297 and DIN 41494 SC48D) system for mounting various electronic modules in a "stack", or rack, 19 inches (482.6 mm) wide.
http://en.wikipedia.org/wiki/19-inch_rack
