I'll bite..
1) I can't answer this question as I haven't flown with them in awhile (2006). I dont recall the seats being any better or worse (my most recent flights in 2010 were each with Delta and KLM and felt that their seats were poor....KLM I found to be painful. I will be flying LY next month, so I guess I can let you know then.
2) I shipped my parents recently in economy, and they felt the service was excellent. They went on and on, and on about it actually.
3)not sure what you mean- I thought I had heard that not all of their planes have updated AVOD (such as their Boeing 767-300 ) which means the experience would still have that 80's feel to it in terms of entertainment options..etc...
4) 2 inches would be nice for any airline I think.
5) Depends on where you are flying from. From JFK, I think they are sometimes reasonable...from YYZ, I find them (at times) to be more expensive than AC, which is odd considering AC has a better points program, and the inflight experience is great. True they dont have the security features that LY has, but the feeling is you get more bang for your buck.
6) Never heard of such a thing.
7) I only flew with them in the 90's and in the 00's and I felt that the experience got worse over time.