The photos are not mine but I do have the same link.
The first hole gives you a one inch drop. The second gives you 3 inches but when I tried it, the tire looked like it would hit the fender and I don't know how you would drop the front that much. It's easy to put on so you might want to put it on as is and try it. If you like it, you can do as I did and take it to a machine shop and have them install the factory bearings.
Yes as stated above.
To drop the front the same amount, I just slide the forks up in the triple clamps.