1. What is the best exchange to buy ICOS?
Liqui.io has a good ICO token selection. Always withdraw your coins to a local wallet after you buy them.
2. What is the best "sub-penny"(below one cent) coin to buy right now and hold for the long term (3-5 years)
The absolute value (in dollars) of a coin should not be a criteria for assessing its growth potential. Look at technology, team, product instead and don't get fooled by 1 coin = 1 cent.
3. What would you choose for the long term? Litecoin or Ethereum Classic?
I'd choose Ethereum.
4. In what coins are the most banks involved?
Ripple, most probably. Also BTC and XEM. Some banks are also trying to deploy their own custom blockchains.