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1) You must access the book, and once you're inside, you click with the center button and you'll see an icon looking like a list. That's the table of contents of the book, if it exists. If it doesn't it'll send you an appropiate message.
2) I read text-only stories, but I think it reads FB2, ePub and PRC quite nicely. However, I haven't experienced converting my books from one format into another.
3) Always FBReader. And the custom firmware at that, as it has more options. FBReader allows to customize margins, word spacing, space between lines, tilting to turn a page or turn them automatically... It really brings you forward. There is a custom script somewhere (in the German PB forum IINW) which allows you to set FBReader as the first choice for every format which supports it. I recommend you to use it.
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