On the street, I have not experienced/noticed compromised steering response as a result of the spacers. If there is a difference, it's indistinguishable to me.
No.
Correct. That's what they suggest; however, it's doubtful very many people do it.
Wow. Not good. Should be checked/re-torqued 50-100mi after install and then every few thousand miles. Otherwise could be trouble, which is why spacers get a bad rep.
It depends on the look you're going for. Flush with the fenders or something more aggressive? There are also differing opinions on the size that will give you the flush with the fenders appearance. I suggest looking at the photos posted in this thread to gauge the various options.
That is correct - the stock studs on the oem hub remains, the spacer is secured to these studs using the supplied low profile nuts. The wheel is then positioned over the studs attached to the spacer and secured using the OEM wheel nuts. The correct spacer is the one above - which is commonly referred to as a "bolt-on" spacer.
The spacer below (which is what I suspect you have tried to fit) is considered a "slip-on" spacer and will not work with the oem studs - the oem studs will need to be removed and extended ones fitted (the extension of which needs to match the thickness of the spacer). Additionally, the extended studs need to be M14x1.5 matching the OEM thread diameter and pitch.
