Correct. Bicycle Dynamos are very simple devices. Just a rotating magnet surrounded by steel poles and a coil of wire. Construction is very much like a transformer except the primary winding is replaced with a rotating magnet.
Correct again! Power on pins 1 and 4 in the USB connector is 5 volts DC plus or minus .5 volts. Four Ni-MH 1.2 volt rechargeable batteries work fine for powering and recharging any device through a USB cable. These 4 batteries do a nice job of regulating the voltage of a bicycle dynamo. As the voltage approaches 5-volts across 4 Ni-MH rechargeable batteries the batteries impedance load the dynamo to the point where it can not exceed 5.2 volts DC. Thats perfect for recharging the batteries and for devices connected to the USB port. A bicycle dynamo also appears to be a constant current device limited to about 500mA of current. If the load connected to the USB port draws less then 500mA excess current will be forced into the device damaging it. The rechargeable batteries absorb this excess current as recharging current so any devices connected to the USB port will not be damaged and will only draw the required current from the batteries.
I purchased a Schwinn dynamo kit at an X-mart store on sale for $7.45. It came with everything including lights an a bottle type or sidewall dynamo. The filament bulbs burned out after a few hours of use and were replaced with LED lights. The dynamo is still in use and functions fine. It does have higher drag when engaged than a hub dynamo but has no drag when mechanically disengaged from the tire. All hub dynamo have some drag with the lights turned off.

See my circuit above. It is very simple.
Dynamo lighting is not as bright as most battery powered lighting. The vast majority of people only ride a few hours at night and can easily recharge there batteries at home or at work. For these people dynamo lighting is unnecessary and does not provide very bright light as can be found with high power rechargeable systems. Also GPS receivers and cell phones may be recharged at home or at work as well. The only cyclists needing the ability to recharge and power there GPS, phones, and pocket computers or PDA is the cyclist that will be on a self supported and camping tour over the course of several days, weeks, or months. Consequently, there is not enough demand to make the above circuit a commercially produced product. it's also so simple that almost anyone could build it and install it on a dedicated touring or long distance commuter bike.