I can answer number three. Yes, it’s just in case you want to shift things around or extend the duration of the animation, it’ll just interpolate forward and you wont have to worry about tweaking that further.
In question one, I think that is exactly what is happening, the images are being cross faded but since it’s just an amorphous blob the transition gets masked nicely. Kent inserted the handy graph to get an idea of what’s happening:

Question two, I think the answer is yes, but I’m not too sure, that would have to be tested, but it sounds legit.