1. I did 3 transactions in localbitcoins ..ans they went well. Yes they are trusted because seller's Bitcoin are kept in escro account for around 72hrs. of payment.
2. the site automatically creates wallet when you sign up. When you buy BitCoins; they gets add up in your wallet on the site.
3. There are a lot of seller there. Some accepts paypal; some don't. The payment method which they accept are usually written in their description box.
Actually; yes.
All you have to do it to transfer the money from send money option to your another bitcoin wallet through the Wallet link. Then you can trade on that another site.