NORTH  J83  JT62  KQT2  63  KQ95  87  A8753  Q8    7  A943  J64  AJT74    AT642  KQ5  9  K952

Dealer: West    Vul: NS   MP Scoring West Pass 1N Pass North Pass 2 East 1 Pass South 1 Pass

West had opted to pass in first seat, despite holding a near "Rule of Twenty" (11 HCP and 9 cards in the two longest suits = 20) opener, after downgrading the Q from 2 points to 1 for lack of two full guards (poor lonely 8).
In pass-out seat at matchpoints, with NS vulnerable, West might reasonably have doubled with the 'heavy' 1N bid.

West opted to begin with a heart lead rather than East's advertised club suit.
East took stock of North's 4 hearts, added 4 in hand and deemed it a doubleton rather than a singleton based on West's not negatively doubling over South's 1 overcall, not to mention that a 4th best heart lead would have been specifically the 5 on this hand, as from KQ85 or KQ87, the Q would have been led (Rousineau leads).
It probably wasn't a singleton because South overcalled instead of doubling.
With such as KQ75 and spades absent the advertised West 1N spade stopper, South might have preferred a double instead of an overcall.
There was always a sure club entry in the A if the 8 turned out to be singleton.

If you've decided to play low to the trick one heart lead, do you signal with the 3 to encourage a heart continuation "udca"ingly OR is the low 3 showing suit preference (club preference over diamonds, low vs. high) in case the 8 had been singleton? Or was the 3 showing an even number of hearts?

Blessed be the 3 on this hand.
It was so multi purpose, so absolutely infallably descriptive of the East hand that winning the A at trick one would have been a mortal sin.
"Whatever the auction, lead and dummy suggest to be the appropriate type of signal here, either count, attitude or suit preference, if I miss out on the right no matter what 3 on THIS hand, I might as well give up the game."
It might not be right to adopt such an attitude on weighing whether or not to win the A at trick one, but it was just one of those days.
The auction and spot lead suggested suit preference was in order, hence the smallest heart to signal for a club continuation after the first heart ruff was the final determination (the above notwithstanding (i.e. a West imagined as like KT8x 8x Axxxx Qxx)).

South won the K and tried a diamond, won by West, who continued a heart.
East won A and continued 4 (lower than 9) to suggest a club (JUST IN CASE the 3 had somehow been miscontrued as encouraging "udca"ingly).
West ruffed and returned a club to East's A.
East lead a 4th round of hearts and South's T was overruffed.
In all, the defence scored 1 spade, 1 heart, 2 heart ruffs, 1 diamond and 1 club, setting the 2 contract one trick, vulnerable, for a -100 score and 6.5 out of a possible 11 (59%)