1. Format it using rh7.2 filesystem - i.e. ext3 - you will need to fdisk it of course 1st.
2. enable quotas in you kernel - there is a nice how-to here
3. If their stuff does not have relative sym links then it should be no problem, if you plan on keeping it same relatively then i would worry about it even less.
4. in /etc/fstab
5. i don't know - i would look into using firestater to set up ip tables.
6. sure! say the muds are at /home/muds make an entry in /etc/fstab where the mount point is /home/muds and mount the new drive at that point.