1: Yes.
2: The documentation says to upgrade to MR4 then to MR4 MP2. You could uninstall MR2 MP2 and install MR4 MP2. I pushed several MR4 MP2 installations to MR3 clients with success (this is my experience only).
3: Latest updates! Many changes to performance and other bug fixes.
4: I'm having a replication issue that is showing old client errors (anti-virus update errors, IPS update errors) that are not real. The clients show they're up to date, but the SEPM reports problem. This has been ongoing for me since MR2. Other than that, I don't know of any other issues (I don't think MR4 MP2 *breaks* anything in my experience).
5: Search on MR5. The biggest update I saw was support for Application and Device Control for 64 bit platforms.
Oh yeah, you *really* need to upgrade to the latest version with all of the bug fixes implemented.