0. Yes, the plugin works with the following Q2A versions (as explained in the wiki): 1.7.*, 1.8.*
1. This is explained in the wiki. In short, the plugin does not create new (fake) users. Assigning posts to random users seems to be odd because non-fake users would get posts created out of the blue. The safest approach would be to post anonymously. Regarding user creation, there is another plugin that can be used for that. You could create the users with that plugin and then assign them manually to the import file. I'm open to suggestion to this item.
2. It creates whatever is needed to create a post. For example, if tags are needed, they are created, if new words are added, they are created, etc.