1) You can run in wireless client mode. I personally found that the AE client was more stable using wired than wireless. However, others have found the wireless client very stable. I wonder if the difference has to do with the signal strength, or may be related to hardware compatibility issues. I do know the Airport Express doesn't have the strongest transmit/receive strength. There is no option to add an external antenna either. Anyways, I had to power cycle the unit in wireless mode every day or so in my setup. With wired, I don't have to do this. OTOH, others say they never have to power cycle the unit, with it working stably over wireless for months on end.
2) Yes, I think you can specify n vs g. In any case it supports both.
3) I'm not sure what the Airport Utility software is like for hardware configuration on Vista, since I only use a Mac. Unfortunately, even on the Mac, the software configuration utility sucks. There is no web-based configuration either. The software does work, but if the Windows version is as bad as the Mac version, then be prepared to do a lot of hard resets of the unit. ie. If the settings you put in are wrong, then the unit sometimes becomes undetectable by Airport Utility. Then you have to hard reset and enter all your settings all over again, instead of just changing one variable. Very, very irritating. I found out the hard way that the AE doesn't like hidden SSIDs, at least with my 2wire wireless router. Adjusting all the settings after each hard reset gets annoying fast. However, when the unit is properly set up, the Airport Utility software seems to easily detect the unit. Kinda dumb though, since when the network connection is NOT working is when you need the Airport Utility.
4) AirTunes is just their branding for streaming over wireless... specifically from iTunes. I have not personally tried AirFoil