Ah, good, a Quick Noob Questions thread! Handy since I'm a Noob and like quick answers

My questions are:
1. Does Terraforming (or later advances) allow you to transform & colonize uninhabitable planets? I mean, that's what terraforming is
supposed to do . . . . . and that reference to the Genesis machine would seem to support that. Playing in a tiny or small galaxy, it would seem that once all the habitable ones are gobbled up, your only recourse is war or cultural domination.
Or does it just open up more productive squares on already habitable planets (boo!)
2. I have just tried one game so far. Everything seemed okay, I focused on a cultural campaign and research, with a small military in the event of hostilities. The problem was, no matter what I did, my popularity dropped like a stone. I built all kinds of entertainment perks, even one on Mars (which could scarcely afford that space) and it still dropped. I lowered taxes to no avail (it'd help, a little but not nearly enough).
Was this because of overpopulation (I did always build farms first), or because I remained a dictatorship ( I preferred to think of it as a Benevolent Monarchy

)?