1) All Strength levels make you more muscular, yes, but it's very gradual. Maxing out one stat will make you pretty normal. You'll be muscular, but still trim. Maxing out two stats will make you about as big as a town guard, give or take. Maxing out all three stats will turn you into the Incredible Freakin' Hulk.
It's commonly believed that leveling up Health will cause your character to become hairier, but I don't think anyone really knows for sure. Personally i think it just has to do with your characters age. If you use the Temple of Light exploit to restore your age to 18, you will not have any body hair.
2) All Skill levels make you taller, meaning that you'll reach maximum height only if you max out all three Skill stats. The hero begins the game exactly as tall as the 'normal' villager NPC's.
3) Upon entering Witchwood for the first time (on the Find the Archaeologist quest) you'll be able to hero save while using the Temple of Light. This allows you to receive the Youth reward multiple times, but to really take advantage of this it means that you'll have to have a completely maxed out character very early on in the game. A time consuming proposition, but not impossible. In TLC you'll be able to hero save about 9-10 times before your game becomes (big warning here) corrupted and unplayable, so make sure to watch out for that. If I recall correctly, you'll want to donate 15,000 gold in order to attain the Youth reward. The amount of years restored is random. I've gotten as much as 9 taken off, but it can be as little as 1. So check how many years you were given back on your status screen to make sure it was 9, hero save, and then repeat until you're 18 again. If it wasn't 9 (or better), simply reload.
Another thing to keep in mind is that you lose 15,000 gold every time... so you'll want to have a large amount of cash on hand to do this. I'll talk about how to make tons of money in a moment.
How the Temple of Light works: You make a donation (say about 15,000) and, viola, they give you a reward of some kind. It's not complicated. You can get away with donating less depending on how evil you are, but 15k usually works for me regardless of alignment. If it doesn't work then reload and try again with more money. You'll get the Gift of Youth, the Sentinus legendary Greatmace, and the Paladin hero title. Sometimes the order varies, but those are the rewards.
4) Sounds right to me. Although I've never heard that magic adds slightly more. I thought everything added .7 years. I guess that could be the case. I never tested it quite that extensively.
5) What Aions said. Emeralds, man. Emeralds are money in the bank. Buy emeralds from wandering traders (and the store in Oakvale) and sell them to the store in Oakvale for MORE than you bought them for. Crazy, right? Kind of an obvious exploit. You can make a better profit if your Guile stat is leveled up, but there's still money being made at 0 Guile. The more emeralds you have, the quicker you'll make money.
5b) If you need to pull together some cash to get started, play Card Pairs in Bowerstone. It's really easy to win and you can make 1000 gold per game.