1. Yes!
WPAD Autoconfigure for Squid
2. Squid will cache HTTP or HTTPS. Your hit ratio depend entirely on the sites that you visit and the frequency at which you visit them.4-8% is around the same ratio I get.
3. I have had limited success with dynamic content. Nobody seems to have a config that works well. All the various wikis etc say the same thing: play with it, see what happens, YMMV, but nothing concrete. That combined with the poor hit ratio has me thinking about deploying Squid just as a base for SquidGuard filtering.