Epic has said that tessellation materials on landscapes are not recommended but I have seen it working. I do not know if blending works on that level, I want to assume it does- someone else will have a better answer.
Yes- except you will need to create another layer slot for each material in your mask in addition to the masked material. It will affect performance, I’m not sure by how much. For example your layered materials would look something like this-
Layer 1) Masked material rock/dirt/grass
Layer 2) Rock Material
Layer 3) Dirt Material
Layer 4) Grass Material
I’m in the process right now of experimenting with possible other ways to do this.
This one is trickier, you can certainly setup a large texture to blend/multiply/whatever you want on top of the terrain textures. Is that the intended effect?
Freely painting, I’m not sure how you could then paint those colors on the map.
I do wish UE4 had vertex color painting on the terrain, maybe it is possible with a blueprint?