(1) Probably, but it is safer to use the disk cleanup wizard or even installing something like CCleaner to do the job for you. That way, if anything IS needed, it won't get deleted before you have a chance to track down WHY it would be needed if it's still sitting in the TEMP folder.
(2) No, it's more like a pre-install folder. When you install software, it MAY copy the installation files into the Local Settings\Temp folder, then forgets to delete them later. Unfortunately, some programs ... even after being installed ... refer to files left in the Local Settings\Temp folder and won't run properly if you delete them. Again, using the tools mentioned above will help determine if they're needed.
(3) Yes, but only because there is more available HDD space. If you're getting low on space, this is one place to look at increasing available space. What will really speed up boot time is turning off some of the things that start up automatically and sit in the Sys Tray waiting for you to use them, such as IM programs and other such things that you don't really need until the time comes to actually start them up.
