i bought this macbook in 2007, it had the inverter cable changed under warranty because the screen was flickering.
I use it at the moment for everything, CAD, general design work the lot, and it's never let me down yet (touch wood). its not an alloy cased one (black acrylic), it's an original Intel and funnily enough mine hasn't melted the main board :S
1. Yes depending on spec. Mines a 2.2ghz with 4gb ram. the only thing that slightly lets the older mac books down is the graphics chip set, which isn't openGL compatible and has a fit at some CAD pacages.
2.No
3.£25 to buy the new OS. Can't be bad?
4. around £400 should see you get a similar machine to the one i've got maybe even a slightly newer one. Remember the alloy mac books only came out last january.
As for expensive breakages, it depends what breaks but i actually found my local apple store was very reasonable. I was even encouraged to repair a friends who had hard drive failure myself and given instruction how to do it in the store.