1. Approx. 1200 products at this time.
1a. Each product can have up to 5 photos.
2. The program will resize whatever size you use so it really doesn't matter what size it is and yes it will make the thumbnails for you, all you need to do is give it a picture in the box and it does the rest for all the other sizes it needs.
3. There is no monthly fee persay (unless you choose some other plan that I'm not using), but what there is are transaction fees just as if you were running it with your own credit card machine. The fees are low and Paypal has a really good setup for checking out how it all works for businesses. I would definitely suggest you go there and see how they have it setup and what plan(s) fits you and/or your clients best.
4. I don't know what a Security Certificate is and I don't use GoDaddy so I can't answer that one sorry.
5. Yes that would free them from any monthly fees for shopping cart systems with other providers.
Hope that helped answer some of your questions and if you have more feel free to post them