Where to specify delete-output-path?

For Angular CLI 6+ you have to edit angular.json file. You have to set deleteOutputPath false in build options

"architect": {
    "build": {
      "builder": "@angular-devkit/build-angular:browser",
      "options": {
        "outputPath": "../dist",
        "deleteOutputPath": false,   <--------------------------- put here
        "index": "src/index.html",

Yes, you can. You have to put it under defaults property of .angular-cli.json like this:

{
  "$schema": "./node_modules/@angular/cli/lib/config/schema.json",
  "project": {
    "name": "project-name"
  },
  "apps": [
    {// app property values here}

  ],
  "e2e": {
    "protractor": {
      "config": "./protractor.conf.js"
    }
  },
  "test": {
    "karma": {
      "config": "./karma.conf.js"
    }
  },
  "defaults": {
    "styleExt": "scss",
    "component": {},
    "serve": {
      "port": 3000
    },
    "build": {
      "deleteOutputPath": false
    }
  }
}

If you want to learn more about this file's structure, you can go here

Hope it helps :)