Yes you can.
no you can not unless you jailbreak it
no, to get a newer jailbreak you have to restore the ipod touch and then update the ipod touch and then download the jailbreak. that is a huge con for jailbreaking.
How to jailbreak my iPod touch
No currently there is no jailbreak available for the ipod touch 2nd gen
You can turn off the iPod Touch if you jailbreak it.
You cannot put themes on an iPod Touch without the jailbreak.
You don't jailbreak a kindle you Download kindle library an then download your kindle books on torrent sites. Normally the DMCA is removed then you just add them to the library and upload them to your device!
Yes, you can "Undo" a Jailbreak, by going into iTunes and Restoring your iPod Touch, or iPhone.
Yes you have to jailbreak
Updating the iPod Touch software erases the jailbreak. You can update, but it will erase your jailbreak.
Fire
yes it can. But to stop that from happening, when the jailbreak starts, DO NOT unplug your Ipod touch until the thing says jailbreak's done. The jailbreak is done when you see alot of colours on the screen of your Ipod touch.