1) This will probably be trial and error with your consumers. I would go with a very low bitrate for the initial stream given a low target duration and assume the quality change will happen quickly (see 2)
2) This really does depend on your CDN. It is easier for VOD however because there is only one HTTP request per segment, unlike live (2 requests per segment). That being said, Microsoft silverlight's default is 2 seconds. And it was good enough for netflix.
3) No idea.