First: this part of the rules is completely optional (more so than normal, I mean); you can simply choose the items you want. They are literally guidelines, not rules, and they're there to help you, not confuse you.
That said, this is the procedure laid out in the book.
- Any item below the base value (8000 gp for a large city) is 75% likely to be available somewhere in the area. You don't check this ahead of time, but when a player asks if they can find an item.
- In addition, there are some number of minor, medium, and major magic items definitely available. As you've correctly noted, if you get a 7 on the first roll, you then roll 7 times on the minor magic items table, and then roll on the appropriate sub-table for each result.
- In many cases this won't have determined the exact item.
- Scrolls and wands can be made of any spell (of the correct level) -- just choose one by whatever means you like.
- Potions can be made of any spell that fits certain criteria (read the potion creation rules); a good rule of thumb is that if it's a buff you can cast on someone else, it makes a good potion. (Like cure light wounds, enlarge person, or bull's strength. But not true strike, because you can only cast that spell on yourself.) Since they're a bit more complicated, you could use the old 3.5 table, though it'll be missing some pathfinder spells.
- Armor and weapons you could choose yourself, or again, use the old tables for armor or weapons.
- Once you've done all this, you split the items amongst all the shops in the area. This is for the entire city, not just one magic shop.
Why does it matter?
It doesn't, really. The rules are written under the assumption that the players can have any item they can afford, so if you're new to DMing just stick to party wealth guidelines and consider letting the players have anything they want.
So don't let these rules prevent the party from getting healing potions or armor of the correct type unless that's what you want!
These limits on items are meant to create a sense of verisimilitude; the idea that there really are a finite amount of notable items for sale. This is probably best used in very small areas; in a large city it's more believable that you can find about anything. If you feel it's important, certainly try the rules out! But it's probably not how most people play the game. Generally either everything is available, or the DM restricts things based on narrative reasons.
Yes, but only via some finagling. A potion/oil only has one target normally, and the imbiber may not select additional targets even if he would be allowed to normally as the caster of the spell. However, a number of spells that can be made into potions affect creatures other than their direct target(s) in some way. None of the methods of doing this involve any decisions normally made by the caster at the time of casting, as:
Potions are like spells cast upon the imbiber. The character taking the potion doesn't get to make any decisions about the effect—the caster who brewed the potion has already done so.
A cursory overview of ways spells do this by means of example follows:
Wandering Star Motes: because this spell can acquire new targets after being brought into effect, it can be used to affect other creatures (though the initial target must be the imbiber).
Enlarge Person: This spell's effect changes how the drinker can affect others in some ways, and so affects them indirectly. This is how most potions work.
Moment of Greatness: This spell is capable of being made into a potion, but also affects those in an area. The area effect functions as normal, and may affect various creatures other than the imbiber.
Draconic Reservoir: This spell gives the subject of the spell the ability to make choices about the spells' effects, including the targets of some possible new effects. These choices may still be able to be made by an imbiber.
Blood Scent: This spell has multiple targets. While the imbiber cannot make use of this, technically the potion's creator could, though things might go badly if the potion was used in the wrong circumstances. In order to target multiple creatures, the creator would need to make all the choices normally made when selecting a target at the time of casting when the potion is made. What those choices are is unclear RAW, but at a minimum includes enough information to uniquely identify who would be affected regardless of when the potion is used.
The imbiber must certainly still be a target, but it is possible that other targets may be added, as target selection is a choice normally made while casting the spell and the rules do not anywhere expressly forbid multi-target potions.
See also: Volatile Vaporizer
Best Answer
The caster level of the spell is set when the potion is created
This is covered under the Brew Potion feat. When the rules state that you are both the caster and target of the spell, this is for purposes of spells that refer to the caster in their effect.
Typically, potions generated by random treasure tables will have the minimum caster level for the spell. So remove disease potions will typically be caster level 5.
You CAN create potions from offensive spells, but they're not super effective
There's no restriction preventing you from brewing a potion of Magic Missile (it's a spell of 3rd level or lower, which targets a creature or object). But remember that you are both the caster and the target of the spell once you consume the potion... In other words, anyone who drinks the potion will take 1d4 + 1 points of force damage.
Addenda
Eric B notes that the magic item creation rules for potions forbid you from creating potions of spells that have a range of personal.
Hey I Can Chan notes that the Brew Potion feat does not allow you to create oils (although allowing Brew Potion to do so is not an unreasonable house rule).