1 - Yes, with a v-bit or engraving bit. (Tapered bits like these are less prone to breaking)
2 - If you are looking for a introductory machine to learn on, this is a very good machine. The customer service and community support can really help with overcoming the learning curve. If you are looking for a production grade machine for commercial use, especial with aluminum, there are some upgrades or alternatives you may want to consider
3- Yes several people have made modifications (myself included) to increase cut height. The easiest way is to cut taller Y end plates: Gantry Upgrade to C-Beam
You can do this yourself, or there are several people selling them: Higher Y-plates:
4- I know of at least one person who cut an access hole in their waste board so they could carve dovetails in the end of planks. You can easily mod the waist board to fit your setup. (most people make their own waist board anyway to save on shipping costs.)