I don't have all the answer, but I have some, so I'll give you what I know, and be corrected later if wrong.
1. Yes, create a custom player character and in the custom player character field enter that character's name. It basically uses the images from that custom character you make as the NPC's.
1A. Directly editing or adding Original NPC's? At the moment, no, but that might change later, since there are things in the works for customizing NPCs. For now, you can asset rip the game assets, find base game NPC art and use that to create your "custom" character. I did this with Oriana and basically have a player character version of her I can use. (New Idea! Run around as a tame and love-able Acacia.)
2. Again, at the moment no, but it could be later. I happen to know all the NPC's descriptions, personalities, and their relationships with other NPCs. I keep it all on a notepad on my computer for referencing.
3. I also have this question. Does this remove current NPCs? If so which ones? Or does it just add more and how many is the limit? I'm sure we'll get an answer eventually.
4. I suspect Capital, might be like Mirel and Other, like Orson. Both come and go on a routine. Probably to visit, so tavern rooms. But if not, then I have no idea and have the same question where new NPC's will live. I suspect once the Get Position tool is working we'll get a map of Silverpine and can set where they spawn and which plot of turf they own if any.
4a. You can probably try making that a thing between two NPCs or you and an NPC right now. I don't see why it won't work, but don't expect some grand ceremony.