[Josieb1]

In answer the question 1 no you can't stop the pop up messages.

Question 2, I don't know. I manually move each book one at a time into a collection and use the Recent sort so I only see the books I've recently added to the account.

Question 3, yes you can have local collections. Local to the device.

You do this by showing collections on your home screen, then starring only the collections you actually want on each kindle. And yes one book can be in multiple collections. Then configure your home screen to only show the starred collections by moving the centre selection on your home screen to My Items (or All Items) and the far right selection to Collections. If the middle sort is set to Collections you see ALL collections available, starred and unstarred. To star a collection you long press on the collection box and select Show In All Views.

That way the only time you will see all the collections available is when you move books between collections using Add and Remove.

Both you and your wifes Kindle's can be configured to show only the collections each of you want to see. Its best if you have different names for your and her collections, mine and hubbys are prefixed with our names.

I don't know about downgrading as the PW2 came with Cloud Collection software.