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1. Yes and No. You need to remove the DRM and convert the books into mobi format... then the books will work. If you cant then the books will not work since the Kindle does not support the ePub format.
2. The 3G is nice since you will only need a cellular signal to be able to purchase and download books and not have to wait until you are near a wifi hotspot. You can buy a book while traveling should you want to and not have to depend on a computer or wifi signal. I am not 100% sure of the coverage on your side of the pond...
3 and 4. I have not tried it but I dont see why not. The kindle has a basic (and I mean basic) web browser that you can use to access gmail, yahoo, and basic web surfing...
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