1) On the collections listing page you should see an edit and a delete link next to every collection listed.
2) You're correct on the former, if you're limiting access to a circle, all members in this case, then search bots, which are not members of that circle, cannot see the content, even extracts. Blog entries themselves are also first and foremost subject to whatever overarching permissions that you have assigned to them within the permissions area of the control panel.
3) See the image above. The collections display as just a text menu. Once you are in one of the collections each blog entry can and probably will, have a title image.
4) Currently the only blog entry in there is how to enable featured blogs. The KB grew organically as people asked questions and it seems somehow the blogs got a lot fewer questions. If you search here in the support area for blogs you might come up with some tickets or posts that can help you a bit.