Improve the overall performance of WordPress by delivering static content from external cache servers.
You should use WP-Offload if your blog has a considerable amount of traffic and you care about end-user performance. Not only you will gain more performance and responsiveness, but your total bandwidth bill will get smaller.
No. You don't have to upload any files at all. The SteadyOffload cachebot does that - static content gets mirrored and delivered from the SteadyOffload cache servers, but at the same time everything remains stored on your server.
No. Your SteadyOffload key is used primarily for URL differentiation. To prevent bandwidth theft, you can set URL filters through the SteadyOffload control panel.
No. You can offload small text files as well as big downloads like CD images.
You should use the custom "xnonce" attribute. Setting a random value to it will tell the SteadyOffload cache servers to synchronize the cached object with the original one immediately.
Just use the custom "xmanip" attribute with the "img" and "a" tags. For more details on the available commands within that attribute, please check the SteadyOffload control panel.
Yes. It's possible to set the quality factor of JPEG images through the "xjpegquality" custom attribute.