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1) I don't think they're that intrusive. Your "screensaver"/sleep screen is an ad and there is a small banner ad at the bottom of the home/library screens. There are no ads when actually reading a book. If he uses a sleep cover they might be slightly more annoying as instead of just opening to whatever screen he was last on he'll have to swipe to unlock.
2) Not sure currently as the PW3 I manage (for my mother) has WiFi turned on often enough to do whatever updating it needs. On my old Kindle Touch I would sometimes get an "ad" in place of the regular ad prompting me to connect to wifi to get the latest offers, but no special pop-ups or anything like that.
3) To the best of my knowledge the device.
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