To answer your questions directly:
You can only create a character starting on Normal difficulty. You'll have to defeat all 4 act bosses and complete the Prime Evil quest on Normal difficulty to go to Nightmare and play with your friend who is on Nightmare, and you'll have to redo this process for any character you create. This follows for other difficulties as well. Edit: There are now level restrictions: you must be 25 to advance to Nightmare, 50 to advance to Hell, and 60 to advance to Inferno.
You must be online when playing Diablo 3, so you can join your friends whenever you want. You can join a friend's game without invitation unless it is private. If it is private, message them asking for an invite.
If your friend just buys the game you can join him in his quests, but he cannot join you until he has unlocked the difficulty you are playing on.
One important thing to note is that the only restriction for friend joining you is that they have unlocked the difficulty you are playing on. Unlocking quests doesn't matter; only unlocking the difficulty does.
So if you want your friend to play with you, change your quest to a quest on their difficulty. Note that this doesn't mess up your save file or anything; you will be able to return to your previous quest and difficulty after you've played with your friend.
First click the Change Quest button in the main menu (notice I am currently on Hell difficulty):
Then select Normal Difficulty from the drop list:
And finally select the any quest (here I select Prime Evil) and click the Select Quest button:
Note the warning: the only drawback to this is you lose all progress for your current quest. So finish up what you were doing before switching your quests!
After clicking OK, then you should notice your current quest change in the main menu:
And now when you start the game your friend can join you.
I've done this with my friend to skip the Butcher on Hell difficulty, mostly because I wasn't geared to fight him toe-to-toe. Proof is here that joining your friends can help you skip bosses (I skipped Butcher but killed Belial):
However, to advance to the next difficulty you will have to defeat all four act bosses.
I finally got this rune, and tested it out.
I can confirm that effect is triggered, and that it will trigger off of large groups of normal monsters as well as bosses and elites, although it seemed to take more than 5 monsters before the effect was triggered. Exactly how many more I could not be certain of, because the monsters were already dying by the time I saw it trigger.
It seems to attack quite a bit faster than normal, so I'd say the 35% attack speed is a 35% bonus, rather than 35% of normal attack rate.
His damage appeared to be roughly 3x normal (I was seeing hits with the buff around 300, with crits around 450, and hits without the buff were in the 75-125 range), so again, the "200% Physical damage" appears to be +200% additional damage.
The buff lasts about 15 seconds.
All in all, this is a pretty nice buff.
Best Answer
As of a recent beta patch, runes are no longer items that are dropped. Instead they are basically skill modifiers that are unlocked as you level up. Each time you level up, you will unlock new skills and/or rune choices that affect your existing skills. You choose a certain number of skills, and a corresponding rune for each, to equip as your skill set. Each skill can have up to 6 different rune versions of it, but you must select which one you want to have equipped at any time. There are no longer different levels of rune abilities, it is simply a matter of having it unlocked or not.