1). With the standard E9 its docking section can only be used with the E7. The E9i(a newer variant of the E9) however has ipod line docking ability.
2). Docking the E7 into the E9 creates DAC and headphone amplifier combination. The E7 will act as an external sound card while at the same time using the E9 as its amp. The advantage here, is that many built-in PC sound cards are not quite up to the task of driving full size headphones like the HD650 for example, so an external soundcard headphone amp combo like the E7/E9 would power full size headphones significantly better while providing better overall sound quality thanks to the E7.
3). Exactly. Just make sure you use the usb cable provided with the E9.
I hope I was able to answer questions. If you have any more questions feel free to ask!