1. Technically no, but it does occasionally happen in practice.

2. Yes, iAd will target ads to you based on your location. Go ahead and type in "pet groomers" to Google, and I'll bet that you'll see a local ad displayed to you. Google is using your location, and I believe it's even using past search habits to display more relevant results. This isn't Apple's doing, it's the norms of the market that they've just entered into.

3. What? Because you have to use open standards and codecs, the media will be wrapped in "insane amounts of red tape"? I haven't seen signs of that yet. My experience with HTML5 audio and video has been quite pleasant on Apple's devices. Furthermore, Apple no longer uses DRM for Music and if I had to guess they could be going that way for other forms of media in their store as well. But again, this generally isn't something that Apple is doing. It's the entertainment industries dictating terms by which Apple must sell the media.