1. There's not really a limit on how much you want to invest. 2.5M or higher, it's w/e :p
3. You can trade whenever you want, personally, i've never had an account banned from ATMercher. Also, Jagex doesn't watch trades, so I don't think drop trading is necessary.
5. Most VPS's are flagged, and the ones that aren't, are unreliable ones that I don't trust at all. Personally, I don't like VPS's.
7. That's literally. Like. The dumbest thing you can give somebody. If you do that, then the person who you are undercutting will most likely just go back to your price, or even higher. You will singlehandedly kill the market for the item you're merching just because you decided to undercut them. If you put many accounts over that person to try to flood their messages, they'll just move + it's also really annoying.
8. I've only had one mercher die ever since ATMercher came out, and that was when a JMod came and killed me.