Yes, but each time sample is considered a unique source. So if you have 100 frames of mesh animation and each one is used at the current time, it is equivalent to picking 100 mesh sources on the list. Of course, then each of these can appear thousands of times with barely any memory overhead.
Practically every feature of the regular shape instancing is supported in V-Ray Instancing mode.
No, because Krakatoa PRT objects are not real geometry. Frost is about polygons, and Krakatoa PRT Objects are about Krakatoa particles. The PRT Cloner modifier would be the place to implement instancing, but it would require significant changes to the way Krakatoa renders particles, and could mean making it actually slower. But it has been discussed before (in fact I think I discussed it a few weeks ago at a meeting).
Yes, I pushed for it for Frost 2, but it did not make it into the release. Our hope was to get it working for something like 2.1, but we will have to wait and see…