Hi juiced glad to have to here,
Safety questions are the best to ask! :)
(I'm a Safety Manager at our plant)
Marty has coverd these pretty well already.
For question #1, take care to keep the hot falling debris from setting yourself on fire.
For question number#2, No insulation necessary, unless you are planning to lay on your back on the "wet" ground and weld.
For question number#3, I also add a small "low speed" fan blowing under the vehicle just to keep a little air moving, in case there were a few gas fumes lurking around under there somewhere. Just don't have have the fan blowing really hard as this can blow away the shielding from the molten weld pool resulting in porosity(holes in the weld).
For question#4, This is a topic of great debate, depending on who you talk to. I, myself have not fried any electronics welding on my vehicles, however other people can tell of horror stories. I usually diconnect the battery as a precaution for the alternator diodes. But I think the main thing is to attach your clamp lead as close to the weld as possible to keep the path of least resistance heading in the correct direction(through your welding cables) rather than somewhere else.
John Wright