1) It should be before all code including the head tag on any page that includes managed content. You probably could add it to a template if DW updates the paths properly on the individual pages, but that would restrict what you could do in server code on the page, so it may not be the best option if you are adding other functionality to the page later, may be better just to add those two lines when you mark the managed content that is editable.
2) You could update it to recognize your page .css. You can read more at the fckeditor web site, which is what we use for the editor in powercms.
3) It shouldn't matter too much unless you are updating the design of the pages or the code. Since they are built with DW, Templates, connections, and other information won't be recognized if it is not in the root of a site. You could put it in a subdirectory and define a separate site in DW for when you want to edit it that specifies that sub directory as the root. Then you could have your cake and eat it too in terms of making it editable in DW and having it in a sub directory.
4) Use the "paste from word" option in the menu when pasting from word. Usually you can use shift+return to add a line break.
5) This is a very limited v1. We are considering what directions to take it. We could add more file management, add more groups and user level restrictions for content contributers, editors, administrators, etc., and we could add dynamic capabilities. It is possible to extend the concepts of powerCMS, but it can't really do that on its own currently. We have no immediate plans for that update since the first version has just been released, but we will pay attention to suggestions.
6) Yes, just do a sql dump of the table and run the sql script on the live server to recreate it
7) Our pleasure