I don't own an Ipod but let me answer you.
1) The sound is very good... Anyway, depends a lot of the quality of the song itself. One bad part is the volume, you can't raise it too loud. For me is fine, but many other complain a lot.
2) you can buy a travel case or a strap. There are a lot available. I use the PSP a lot in the gym, just be careful because it's big. If you'll hear it constantly, I'd suggest the earphones with remote... That way you can change song and stuff like that without opening the case if you buy one.
3) No you can't, at least not with legal firmware.
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