1) Looks plausible - you don't have to do anything special because a PSX CD is entirely standards compliant (which I guess is something you would expect from one of the companies that originated the CD standard in the first place). One thing you do need to watch is that CD-ROM directories are a little unconventional - in addition to the directory there is also another structure called the path table that is used to improve access performance. Failing to keep them in synch can result in strange and random behaviour.
2) Generally, images are data and data is stored in form 1 - there is nothing that actually prevents them (or any other data) from being written in form 2, however - you just need to write your own code to handle it, in which case they will probably be in some private format anyway.
3) Yes. Both the MDEC stuff and XA audio are stored in form 2 - the CD controller does implement the XA filtering functions so you can interleave streams using them.
4) Not sure what you mean... If you mean do directory entries have to be alphabetical then no - you can put them in any order you like.
5) In ISO9960, everything has to be stored in an unbroken sequence of incrementing logical block numbers. You can't have gaps in files. You can leave unused space on the disc, or move other stuff around to fit into the space and adjust the directory to match.
6) Pretty much - just write the data to some series of blocks and update the directory to include it.
7) Best thing to do is download the SDK and have a look at "cdgen" - this is the original Sony program used to create PSX CDs and obviously produces compatible images
8) The CD controller doesn't do anything special with FADs and will in theory accept up to 99 minutes - the catch is that it uses hard-coded skew tables for seeks and hence the seek performance degrades as the disc size gets further away from the 74 minute CDs it was designed for.
9) No, but see the but about seek performance above
10) Yes, the PSX uses standard CD-ROM XA discs, although some of the flags are ignored by the CD controller. All the stuff about the subheader is accurate. Note that the PSX does have a raw read mode (0x924 long sectors) and if you use that the CD controller just gives you the data.
11) You can treat the PSX disc format as being ISO9960 - the only strange thing is that the STR files are written in form 2, so systems that don't support XA will either error out reading them or return corrupt information. This is obviously much less of an issue than it used to be since XA support is close to universal now. Even a non-XA compliant system can copy the discs OK, since according to the TOC the tracks are mode 2, and since the first 12 bytes of an XA sector are the same as the first 12 bytes of a mode 2 sector this works with no problem. The only catch is that if you read a raw dump of a track using tools that don't understand XA format then the data is extracted from the wrong place because of the subheader.
I think that's basically it - all the information you need should be in ECMA-119 (for the file system) and the CD-i Green Book (for the XA stuff).