1) Yes, Balance Druids are pretty good at being a hybrid (healer & damage). They are really strong DPS and highly desired for PvE, but can encounter some problems in PvP if not teamed with people who can help cover their weaknesses - still strong damage, just not as strong utility in later expansions. The biggest drawback here is that Balance doesn't have its silence ability that it gained in Cata +.
Restoration Druid is very strong all around.
2) Icecrown, from scratch, probably 3-5 days if you put effort into it. Lordaeron, 2-3 weeks, perhaps less if you're really efficient.
3) More people PvPing, mostly. Which ends up benefitting multiple aspects of PvP.
4) Unable to comment at the moment. Perhaps someone else can cover it.
5) No. It took me about 5 years to start getting bored of it, fully quit after 7.
6) Raid Finder does not exist in WotLK. People are spamming global all the time looking for additions to their raids though.
7) Um... there are still a fair number of bugs, but I would comment that 90-95+% of things work really well.
8) Yes, people do that old content for transmog and for twinking. However, most of it isn't very easy in WotLK. There is a fair amount of WPvP. Ganking is pretty big in general. Raids on SW/Org happen with some frequency also.