1) I was never fully sure how the program removed or added dependencies. I can only go on what I believe I remember about TESDTK. I think what I did when I wanted to be sure I removed dependencies was like this; I believe I unchecked morrowind, checked bloodmoon and tribunal, and then pressed the remove dependancies button, and rechecked morrowind. I don't believe that I put a check in morrowind if there wasn't one to begin with.
2) I never heard or realised that you could use an .esm file like an .esp file. I had always thought that morrowind.esm was the only esm file that would load from data files. If .esm files can be run the same way as .esp files, you might try using those instead to get land mods to work. However, it is not required to change file types as far as I know, unless there are compatibility issues. There might be, since I still have no idea if you can run .esm files from data files just like .esp files.
3) I don't think anyone has gotten an answer on this one. I think half of the time, I updated them anyway to be sure. I don't think it made a difference.
By the nature of some things being unclear even with a really good description, you can see why trial and error is necessary in order to determine what works. Because I would bet that the majority of people are just as unsure, and still unsure why their mods work and if the tools were understood correctly.