lemme see if i can answer some of these things for ya.
1. there's three modes of midi mapping; focus, position and layerset + position. try switching between those and see which one is what you're looking for.
2. yes. I've been with m8 for some time now and they've yet to require payment for and update. not sure how long that will last though.
3. as far as I know yes, most people use the IAC driver which you can access in the audio midi setup app in your utilities folder on a mac. in m8 if you go to preferences the key/midi mapping tab will have a device name that you set up in said audio midi setup. then in ableton in ur midi preferences select the same driver. make sense?
4. there's the online module library (not sure if you can see it in the demo), there's a wish list section of the forum & some of the coders of m8 are on the twitter and some times post stuff apart from m8. development of m8 is slow in the sense that they are not constantly updating it. the real muscle is in the modules which are written in python. I know nothing about python and i at times am able to splice other peoples modules to suit my needs.
5. i think most people do .mov with a photo-jpeg codec at about 85% resolution. photos; i like pngs personally but either way i like how i can take a folder of images and drop in the media banks.
hope this helped