bike wrench

From the eminent, late Sheldon Brown, index shifters have to specify exactly what speed they are compatible with. So an index shifter marked for 10-speed would not be appropriate for a 7-speed cassette.

Indexed Shifters These need to have the spacing of detents ("clicks") to match the system they'll be used with. This usually goes along with the correct number of clicks -- though a shifter with an extra click also can work, as long as the spacing is OK. (Friction shifters have no compatibility issues, they work with everything.)

IIRC, 7/8/9 speed cassettes have the sprockets the same width apart, so an index shifter for 7/8/9 would simply stop at the correct maximum detent. But 10 speed cassettes had to squeeze more sprockets into the same total width, so the width between each is narrower. Thus, a 10 speed index shifter moves the cable a shorter distance, to be compatible. I believe your question #1 is answered in the negative.

For your question #2, I didn't really think friction shifters had any continuing use-cases. Indeed, even indexed shifting is giving way for electronic shifting, although that's not going to be sensible for a 90s MTB. Unless you're adamant about friction shifting, you might consider the upgrade to indexed shifting.

For #3, I can't quite imagine what the manufacturer means by a "Friction transfer mode allows the shifter to switch from index to friction mode on demand". I can't find any further information, and I'm puzzled how that would even work.

As for the stops, an indexed shifter will stop at its highest and lowest numbers; the cable would be adjusted until shifting is reliable into and out of the highest and lowest sprockets; the shifting distance between numbers is not adjustable. There are also stops on the derailleur, one beyond the smallest sprocket (tallest ratio) usually marked with an "H", and one beyond the largest sprocket (shortest ratio) marked with a "L".

The H stop prevents the chain from shifting off the end of the cassette. The -- IMO, more important -- L stop prevents the derailleur from colliding with the spokes of the rear wheel. In motion, this can cause the wheel to lock-up but more likely will rip the derailleur and assemblage from the frame, causing significant damage. With proper adjustment, this should never happen unless the derailleur was already bent from some other incident. Sometimes a spoke protector (the so-called "dork disc") is added to prevent catastrophy, but again, any well-maintained bike in normal service will not have its derailleur collide with the spokes.

So while index shifters will have stops that should duplicate the same stops on the derailleur, friction shifters may vary. I suppose you could have no stops on the friction shifters and rely solely on the derailleur stops, but that sounds like trouble: the force applied by the lever of a friction shifter can potentially overwhelm the small set-screw of the derailleur limit. Pushing hard on that lever could warp the derailleur, with all attendant damage.