will the company convert BTC to cash right away, or will it keep it for a while before conversion (if ever)?
From TFA: "Mr Byrne said that if Bitcoin derivatives exist when Overstock starts to accept the currency it would "bank" Bitcoin and use them to hedge the risk of changes in its value. If such derivatives do not exist, he said Overstock would trade Bitcoin into dollars every day."
Bitcoin derivatives would require a major re-write of securities law. That's not going to happen. So he would have to sell the Bitcoin immediately,
So for those wondering what effect this will have on BTC exchange rate: It will create a selling pressure as people use stored BTC to buy from Ovestock, who immediately convert the BTC into USD.