1) there are usually only about 4 bends in the exhaust, so at $20 a bend for stainless you would be better to use them instead of the section bends, considering the time it would take, as well as the limited accuracy you would have with an angle grinder. If with stainless you would want only a gap between the pieces that is smaller than the filler wire you will be using. you can do it, but the trouble with increase and neatness will definately be affected.
if you decide the crab style, then use 7 degree's of less for the angle of the cuts - any more and the matching of the end pieces becomes ugly,hard to weld, and a flow restriction
2) butt joints will be best, once again its neater, but true it would be harder to weld neatly but would look better in the long run and no worry of affecting the flow
3) most hangers are welded onto the side of the exhaust where needed, just ensure there is no burn through or holes. as well and sufficient area of weld to prevent any cracking since this is where the weight is taken from. also from what i have seen, try and triangulate the support so there is more coverage
4) up to you on what you want to pay for the grade of stainless, just remember to match the filler with the grade of steel you use.
5) it would be easier if you did it in sections, but it really depends on why you are changing it in the first place. If your happy with the design and it seems to flow well, then i would copy it.