As far as the origin of knowing about the "break" part of the record
Yes, the Disco Dj's were aware of the break and some of them stuck to the break part. The main difference between what most of the Disco DJ's did and what Herc/later hiphop dj's did was that the HipHop DJ's stuck to the break and looped it over and over whereas the Disco DJ might tease with the break for a bit but still play the rest of the record.
On Herc dj'ing style. At his early jams he attempted to play many things, Reggae included but the crowd didn't like it. At this point, early on, the crowd was basically all black (black american and West Indians) because Puerto Ricans hadn't caught on yet. They wanted to hear Funk music so that's what he played. He was playing the entire song on
one turtable at this point. As time went by Herc realized that the crowd would get really hyped during the "break" (basically the part when the music kinda drops out and all you hear in the drummer or the bass) parts of the Funk songs which lead him to only playing the break parts of the songs.
He did this in by borrowing the Disco technique of 2 turntables to play 2 records so he could string breaks together. His technique was crude and not up to par with Disco style djing but he called it the "Merry Go Round".