A jailbroken iPod Touch is certainly legal. However, the act of getting every app in the App Store for free (the ones that require payment) is illegal.
You have to go to jailbreakme.com from your ipod
Restoring an iPod should reinstate the warranty to a jailbroken iPod, unless a problem occurs during restoration, then the warranty isn't in effect since you are trying to restore a jailbroken iPod.
The Jailbroken IPod has Cydia, which "unlocks" or makes your IPod capable of more tasks than a regular IPod.
Yes, you can put music on a jailbroken iPod Touch.
Yes, but it will erase everything on the iPod, including things available only to jailbroken iDevices, such as Cydia, Winterboard, etc. You can then put all NON-jailbroken media back on the iPod by using a backup file of the iPod which is saved on iTunes.
You get sydia
yes if your warranty is still here and your ipod's not jailbroken.
yes
yes
you cant
No, they shouldn't.