1. Dragons only have their base form, no human or elf, unfortunately.
2. You can make bodies of water that border the map. You can't really create an ocean though. You can make ships.
3. Yes. In a dialogue option, simply say that only that class or race can access that conversation part, and start a quest from their.
4. No. There is no overall view, only moving from area to area manually, which means that spaced out modules can get tedious fast (walking around more than actually doing something.)