yes, it does
You have to use the TM to teach it Psychic.
Butterfree is better but if you train oddish it will evolve to gloom then use a sun stone or leaf stone to evolve it to vileplume/bellossom which are a little better than butterfree but butterfree can learn psychic type moves which can defeat vileplume and bellossom so choose butterfree if you want that but if you want an offensive and defensive Pokemon choose vileplume.
No, Butterfree cannot learn Fly.
The first Psychic Pokemon you can gain in FireRed is Abra, North of Cerulean, but you can use Butterfree as well which can learn Confusion, Psychic among other moves (Caterpie/Metapod north of Viridian)
NO!
It can't learn fly
HM 2, which is Fly, cannot be taught to Butterfree.
Butterfree can't learn Aerial Ace by level up. It can, however, learn it by TM, which you can find on Route 9.
Butterfree learns confusion at level 12.
Psychic, Stun spore, Reflect, Light screen.
Sleep Powder, Dream Eater, Psychic, and Supersonic (which is quite good with Compound Eyes). Toxic is an alright choice although it negates sleep Powder, so you might want Psychic, Toxic, Super Sonic (or Whirl Wind), and Giga Drain.
Lapras cannot learn psychic by natural means. It can learn TM29- Psychic.