i think that price range can get the siberia series.. of all the SS headset i have, the siberia series is the most comfy and balance.. previously i have use 3H (high treble for FPS game is suitable), siberia v1 (balance sound all rounder from gaming to music), 5H v2 (super sharp treble, best for FPS) now 7H (all rounder as well good for gaming and music listening).. but personally i like siberia.. maybe i'll grab the V2 next month or wait for the elite..

i dont think so 

technically it wont
because usb takes in digital signal, 3.5mm takes in analogue signal
the usb is technically a DAC(digital to analogue converter) which converts the digital signal to your analogue headset. Feeding the DAC with analogue signal wont have any effect.
But then i saw a few pages back people claiming it works
but i highly doubt it
what phone you using btw? 

same phone as mine
usb otg cable will work

the light will also light up
for me i prefer it wont light up so that it wont take much attention when using it in public

not much

must be TouchWiz based rom or even better use the original one
then enable docking sound somewhere in the option section

mine worked perfectly
what rom are you in?

Stock rom 4.1.2
4.3 still is still buggy