1. Yes.
2. I don't see the need. The aluminum blocks are pricy enough.
3. Yes.
Everyone knows I stay clear of aluminum blocks when I can, so call me biased. But I'm just not a fan. They have their place, but IMO that's a very small niche. Paying an extra $2200-3700 for a block that will noticeably be down in horsepower in comparison to a cast iron piece, in a 90% street car just doesn't seem prudent to me. There's also extra block prep and machine work involved which adds to the cost.
Most of us that have built a few of each notice anywhere from 30-40 hp difference on similar builds. The general "rule of thumb" is that 20-25 hp will change your ET by .1 second. There's also a general "rule of thumb" that dropping 100 lbs will decrease your ET by .1 second. In a street/straight-line situation, the savings of weight of the aluminum block won't really give you any performance advantage. If this were a roundy-round application, or another race class that focuses on weight reduction, then there would be a benefit.
Your ring seal loss comment is the key here. On an all-aluminum engine build, valve lash/preload changes by about .014". Compare that to an iron block/aluminum head combo, which changes about .006". Unfortunately, aluminum has a much higher heat expansion coefficient and the blocks move in every direction.
The pros of an aluminum block is that you can change sleeves if the cylinders are worn. They are also easier to repair if you decide to window one.
Whatever you do, make sure and have it pressure tested and/or sealed internally. Casting aluminum is hit or miss and I've had to reject multiple aluminum FE blocks because of porous areas behind the lifter bores that leak air on a pressure test.
BTW, with reference to your camshaft note, you'd be surprised at how low duration/lift you need with well-flowing heads, even on a 500+ inch engine.