a: Yes, the processor is powered either by the serial cable (when the jumper is set) or the 7805 regulator when 12V is applied to the motor power terminals. So you would generally set the serial power jumper when programming unless 12V is on. It is probably a bad idea to have both serial and 12V->7805 power sources connected to 5V at the same time.
B. Arduino baud rate and repetier baud rate are two different things. For Repetier or other reprap software the baud rate is 76800 as you said.
The bootloader on the chip is the Gen7 bootloader so for the arduino environment you just need to get the Gen7 support files and copy them to the arduino hardware folder as instructed in Gen7 arduino support Then you just pick the Gen7 1284P w 16Mhz for your board and it should work.
B. Arduino baud rate and repetier baud rate are two different things. For Repetier or other reprap software the baud rate is 76800 as you said.
The bootloader on the chip is the Gen7 bootloader so for the arduino environment you just need to get the Gen7 support files and copy them to the arduino hardware folder as instructed in Gen7 arduino support Then you just pick the Gen7 1284P w 16Mhz for your board and it should work.