I'm currently planning on entering the league for the 1st time and I'm currently breeding as many horses as I can to try and get some decent ones. My question is once I believe a horse is ok and I export it for ck trialling ect can I then retire the horse to breed from in my normal game.
I'm guessing the horses in the ck are the ones I choose from to enter in the league?

Absolutely, thats what you want to do. Ideally you want to be breeding the best horses in the CK together, a horse may have won 10 G1s but could have competed in a weak era.