1.) No, my sister bittorrent'd half her stuff. She was paying for it, until her computer crashed and lost all those songs, it was a horrible 100+ dollars wasted, so she gave in and is now just pirating the songs for free.
2.) Yes, but it might take a hell of a long time converting the files. (Is converting them all now, before she actually buys one, her sister told her too)
3. My sister's computer crashed and she was trying to put her music back on her computer once it was fixed 'cept iTunes erased everything off the iPod when it saw there were no files on the computer yet. I think all you should do is make a data disk and you should be fine.
I'm getting a iPod Video too, my sister has one and it's the best. <3.