slavearm, I may perhaps have some information for you.
To answer your questions quickly:
1) Yes, and the chiller will even work with flow as fast as 1920 GPH. ALthough I use a 635 GPH pump and like the results.
2) No, the pump must always be on, unless you hook both the pump and the chiller's power to a temp controller that will switch both on and off together. otherwise you could have the chiller on but without water going through it.
3) yes, that would be sufficient, but I would prefer a lower flow pump closer to the minimum side of the 480-1920 range.
My experience...
I recently purchased a 1/4 HP JBJ Arcitica chiller, (the same one you'll be getting I believe). I was in on the group buy until it started taking too long. Then I just went and bought the unit retail.
The flow range recommended for that unit is 480 GPH-1920 GPH, if memory serves correctly.
While the manual shows three installations all of which have the chiller between the return pump and the display, I can tell you that those installations will not work unless you are willing to take a 300-400 gallon reduction in your return flow.
I hooked mine up as recommended per the instructions and it changed my 900 GPH return to a 300 GPH return. I'm estimating here, but the chiller reduced my flow to all but a trickle.
So 2 nights ago I took the chiller out of my return path and added a pump to give the chiller a dedicated pump. The chiller works much better in this manner. My return flow is no longer constricted. The chiller just returns its water back into the sump. Also with this design my chiller only kicks on twice a day now and the temp on my tank thermometer reads now the same as the temp on the chillers thermometer.
I use an Eheim 1260 (635 GPH) pump for my 1/4 HP chiller. I wouldn't recommend anything much faster, (or slower). SO you can see I'm near the minimum side of the range, but it works well.
Let me know if you have any more questions.
You can see my chiller install on my website, (little red house). Browse back a few days for the pics. Note that the pics on my website do not reflect the changes I made Monday night to move the chiller onto its own independent pump.
CHeers
Josh