2: It drops off at 1 point a parsec to a minimum of 1 point. So if there is an asteroid belt at an empty star (or you just created one with a terror star), depending on the map setting, this will only net you 1 point of production no matter where you point it, so point it to where it's needed. 1 free point is still 1 free point.
In theory, yes.
In reality, no.
I was testing a level 3, and it still gave 7/20 production out to ~20+ parsecs, but somewhere beyond 30 parsecs it dropped to 6.
Can you see why I didn't spend more time trying to nail it down?
EDIT: CaptainYar, racial bonuses apply to asteroid industry (customization points, techs, and I suppose we can include economic starbases in this category), as for most intents and purposes asteroids are treated as part of the base production of a planet.
However, a planet with an innate production bonus will only give that bonus to the asteroid industry (the rest of the industry gets it regardless) so long as it does not have a power plant/manufacturing capital/etc on it. For some reason not only do the manu cap/power plants not treat the asteroid industry as base industry, but they cause the planet's production bonus to no longer treat it as base industry, either.
Even when it is no longer treated as base production, the racial bonuses from customization points, techs, and yes, economic starbases are still multiplied by the asteroid's production as well.