Sorry for the late response, @joek.
Most of the answers you are looking for are in this wiki page.
Q1 - It just adds new line items + offsets (optionally). Nothing existing is changed.
Q2 - If you already have things categorized with granular categories, there is no reason to use the workflow.
Q3 - This is in the documentation
Q3 - It just applies a temporary filter to show you the recently-imported transactions. You can clear the filter after.
Q4 - You could make a copy of your spreadsheet and run the process there.
Good luck.