1) If you're going to remove all of the paint, you would either have it media blasted, or scrape it with a scraper. The final finish work is done with a sander. You wouldn't attempt the entire job with a solvent or sandpaper, it would take an incredibly long time.
2) once done any sanding, "Wipe" it down with a paint thinner to remove any dust.
3) You don't need to take the paint down to bare hull unless you are stripping years of built-up hard paint, or if you have serious layers of paint delamination in spots making the hull look like a relief map.
4) Follow the paint manufacturers preparation and application instructions.
5) Paint various by conditions. Petit and Interlux are the two most popular brands. Ablative is best for planing boats. Read the spec sheets to determine what best meets your needs.