Thanks for the feedback.  I'll go ahead and answer this one.

2.  "Why can a block only be so big?"  "Who/what determines the size?"
Right now, blocks are limited by the database format in the old version of BitcoinD.  The network tried using larger blocks for a while, but it caused the old BitcoinD and new BitcoinD clients to be unable to communicate.  This was a bad day.  This is the cause of the "All users of Bitcoin-Qt/bitcoind versions 0.7.2 and earlier are required to upgrade to 0.8.1 or apply a manual workaround by May 15." message at the top of every page on bitcointalk.org.

Cheers,
E2