Rules vary so widely by airline that it's hard to give a good answer. Your best bet for information would be to search the specific airline boards for detailed info.
Some general answers to your questions (note that I'm most familiar with UA and AA, so that's what I'm basing my info on for the most part). First and foremost, note that most of these answers assume that you hold at least a low-elite status in the airline's FF program. Upgrade rules for non-elites range from very tight to "no upgrades", depending on carrier.
(1) Many airlines award free upgrade credits to pax that hold elite status in their FF program. i.e., 4 free 500-mile credits for 10,000 flown miles.
(2) You can typically use an upgrade for you and 1 companion. Some paper upgrades can be given to anyone, but these are rarer than electronic upgrades, which must be used for you and your companion.
(3) You got it right: 750-mile flight = two 500-mile upgrades. Kind of stinks when you fly 600 miles, doesn't it? (Some airlines will let you slide on, say, a 510-mile flight.) Note that US Airways plays hardball: CLT-MCI is 805 miles and requires TWO 800 mile upgrade certs. Needless to say, not many people upgrade that flight with certs.
(4) Most upgrades move you up 1 class. On a three-class plane, that's coach to biz, not coach to a first-class sleeper suite. (Unfortunately.)
(5) On AA, 8 upgrades costs $250 until Jan 15. On Jan 16 it goes up significantly, although I haven't paid close enough attention to what the new cost will be. I think fifty bucks apiece or something like that.
(6) Varies by your elite level in the FF program, although there are some rare certs out there that allow time-of-booking upgrades.
(7) You're talking about Operational Upgrades, referred to here on FT as "Op UG". This *does* happen on occasion, usually to FF elites or people on full fares. I have gotten them on UA, AA, and US - all as a mid-tier elite flying on a restricted coach fare. In all cases, I got a business class seat at check-in, not the gate. In all cases, it was a surprise to me so I never had to bring up the topic with the agent. I don't have any experience "sweet talking" an Op UG.