I don't know if one can transit in the same city twice. However, it would not be considered a transit but rather the end of one flight and the beginning of another with just a very short visit to whatever city (using their termonology).
I do not think there is any residency requirement but the agent told me that it can obly be bought if one has a star alliance return trip from Europe (as you guessed).
As far as I know the prices include taxes.
edit-to add the part about taxes
[This message has been edited by Goldlust (edited 06-10-2003).]