1 & 2) essentially correct
3) Do you have the "Automatically remux if video is compatible and no subtitles..." checkbox checked under the Common Transcode settings? The marker at the end of the video in the main directory indicates that the default transcode engine will be used. If it works when forcing MEncoder via the #Transcode# folder, the default is probably trying switch over to TSmuxer and then failing. But the debug.log file would confirm this or whatever else is going on.
a) don't trust the bitrate provided by the PS3 when the file is stuttering, it is wrong
b) Rules of thumb: If you have an increasing transcode buffer while the video is stuttering, your network is limiting. If it's decreasing or empty, your CPU is limiting.
5) Gets you some ballpark transfer rates, although 70mb may be too small to really see your max sustained transfer rate. Also, make sure that when you're copying it's with a PS3 compatible file so there are no transcoding limitations. You can get more exact numbers using a network monitor.
gives a pretty good explanation of the three parameters
7) It will change the processor load to try and keep the output file in the available bandwidth. Lower available bandwidth means higher CPU load.
A lot of these have been asked and answered on the forum already, so next time do some more searching. Also, take at look at some of the tutorials in the following thread for some more explantions of the various workings/options: viewtopic.php?f=6&t=2191