Eric,
1. Mine has never kicked in for over 10,000 miles. From what I hear, it's most useful in snow or other harsh weather, but it is highly recommended by Consumer Reports (?) as a feature that should be standard in every vehicle.
2.
http://www.toyota.com/vehicles/2005/prius/options.html
3. Yes
4. I heard something about $200-250, but I'm not sure
