A city is much more manageable
1–UE4 focuses support on the FBX file format, which should be the standard for quite some time, it can both import and export FBX files. Normally you export each object to UE4 and then place them in the level, but I believe that they added a scene export function so you could realistically set up the city in your 3D program (ideally 3ds Max or Maya) and then export the whole thing to UE4 and it should be able to place things properly for you, then you would have the same thing in both your 3D program and in UE4. There’s more to it, since you’d want to set up LOD’s (level of detail) and stuff like that, but that’s something that makes things much easier.
2–Yes, you’d be able to export it out, but you would likely already have the 3D assets in your 3D program already
3–For those programs really the only limitation is the amount of RAM, which can handle quite a bit–there was the recent movie Might No. 9 which had a full city model that they developed a system to be able to manage all of the assets and be able to render what they wanted and that was done with Maya.
4–For projects in UE4 your project is saved to its own folder, you can simply copy the folder to a new location to move it around–the source files for your assets would need to be managed separately in whatever way you want
5–What would be really good for gaming development, one of the Socket 2011-V3 processors, like the i7 5960x, plus something like the Nvidia Titan X would be a great combination. But–Intel is coming out with a new generation of processors and Nvidia is also coming out with a new generation of graphics cards.
If you’re interested in 3D rendering for animation, then you might consider building a render farm, there are options like GPU rendering where you can render with something like RedShift or iRay which uses as many graphics cards as your computer supports and it works pretty well, that would be if you were rendering stuff in your 3D program (Maya/3ds Max/etc.)