The code posted for #1 will strip all tags EXCEPT <p></p>
With regards to images, the image being shown in the featured box is being selected as you specify; the issue is with images that are within my post comment, which get taken as the excerpt and overlayed on the featured image (I don't have any explicit excerpts for my posts - "excerpts" are the automatic first 55 words as taken by WP, and as it happens, those first words often include images) - also note that they're not JUST "embedded img tags", they use a bit of tricky CSS (the technique I'm using is derived from this:
http://randsco.com/_miscPgs/cssZoomPZ2.html).
#3: Yeah, I caught that and ended up just setting the preview text to be only on the right. In any case, since this is achievable without hacking any PHP it's not a big issue, just thought it might be nice for some users to save those extra vertical pixels
#2 and tags: Coo. I have them both running as a temporary "hack" solution by just replacing the query on featured-posts.php line 92 with:
$cat_query = new WP_query(array('tag'=>'featured', 'orderby'=>'rand'));
(obviously it's a dirty hard-coded solution, but proof of concept that it works like a charm

)