1.) Yes! A customer can add as many products, from as many vendors as he wishes, and purchase everything in one order. The commissions are correctly calculated for each vendors products within that order, and all works seamlessly. Try WC Vendors Free. It works the exact same way. 🙂 You should not buy Per Product Shipping, because in the next release of WC Vendors Pro v1.1.0, we will have the same functionality, yet better, built into Pro. Save yourself the $79! 🙂
2.) PayPal does have a hard limit of 6 payment splits per purchase. As such, checkout would fail. PayPal Adaptive Payments is the only gateway that this is a limitation for. In order to avoid this, you would simply SCHEDULE your payments to vendors out, rather than INSTANTLY pay them. There are many scheduling options for PayPal AP as well as manual payment options with PayPal in your WC Vendors Settings on the Payments tab.
3.) All depends on how you have it setup. If you schedule or instant pay with PayPal, vendors would not need to email you. If you manually pay them in some other fashion, then whatever system you choose works best for you, go for it. 🙂