1st: Try calibre 0.6 beta
, which has more output options than earlier versions. I'm not sure single-file HTML is one of its options though. You may only need an exploded ePub (see 3rd below), which typically has multiple XHTML files.
2nd: No. But in the US (at least) stripping DRM from ebooks you bought for personal use has never been challenged in court and is probably legal. See Adobe ADEPT DRM for EPUB circumvented
3rd: An ePub is a ZIP file. So rename it .zip (if necessary) and unzip. Edit the text (typically in .xml or .html or .xhtml files). It may be ok to zip the result again and rename it to .epub. It is safer to import the .opf file into Calibre and explicitly convert to ePub.