Just built up my new bike with a Yoko Reaction kit. Practiced first with the stock SRAM housing and I can say for sure that the brake housings are much stiffer than the stock stuff. I used a Park tool cutter which squished the housing a little, but a squeeze with pliers and a poke with a nail opened it back up. A dremel would be nice to dress the edges, but is not necessary, imo.
1. AFIAK the cables come pre lubed (handling the cables got what I can only deduce to be lube on my hands). I didn't lube mine and they work very nicely.
2. No problem, except the brake housing ferrules do not fit in the brake/shifter slot. I just did without the ferrule. Only about 250 miles but no problems so far.
3. I don't see any problems with this. Don't have first hand experience, however.
4. This is what I did. When i got a little cable stretch a few quarter turns out brought me back to the right tension. As the cables stretch, you'll only want to "lengthen the housing." Setting the barrel adjuster all the way in will give you the most adjustments without having to redo the cable clamp thingy. AFIAK I can't see any disadvantages with doing this.

Hope that helps.