1) If you want to, sure. The advantages are that the file will be about 80% as big in LRF, and you'll be able to have in-line images. There does seem to be some small speed advantage too, but it's not marked.
2) through 3) I'd point you to the
formatting BKM in the Wiki
4) I'd suggest you use whatever line spacing you find most comfortable to read.
5) The only other suggestion I'd offer is to look at the various
conversion tools available here for the actual conversion.
Hope that helps!