1. The caller will either hear a busy signal, or if you have call waiting, you will hear a call waiting beep.
2. never
3. see answer #1
4. no
On the 110, you can have an analog local Telco line IN, and you can provision up to two VOIP provider numbers.
You have one analog jack to plug your phones into.
All off your phones are connected to one jack using a pair of conductors (If you have a cordless phone system, then the base station is connected to the Obi).
Therefore, it is going to work similar to when you had just the local telco, If you get another call the other phones will not ring, because the system is in use. If you have calling waiting, you will hear the beep, when a second calls comes in, but only one conversation can be happening at one time.
If you want the ability to use a local telco, and also a voip provider, I suggest you buy an Obi 200.
With these two devices, you can either get a two line phone system, and make and receive two different calls at the same time, or split your house wiring up, and connect some of the wiring to each Obi. (Assuming your desire is to have a phone ring, when you are already using the phone, and another call comes in)
Like you, I kept my landline at first. But once I found a Voip provider who offered CNAM, then I ditched my local telco/CATV provided landline.
I have a couple of free incoming Fax to email providers, and if I need to send a fax, I either try fax over VOIP, or a free or paid internet fax provider (by uploading the file)