1. Contracting: Assuming you are in the states, be prepared to give 30-40% of your earnings back to the government. As a self-employed person, you get taxed twice, once as business income, and then again as personal income. This is why contractors typically charge $80-120/hr. They only take home $50-72. Also, don't expect our "business friendly" government to help you out in the insurance department either. If you can qualify, you may be looking at $1000+/mo to insure your family.
On top of all that nonsense, you still have to find work, and it's unlikely to be steady. You may have a huge flood of work, and have the opportunity to work 60-70/hr weeks and make a huge payday, or just as likely, you may have to float yourself for 3 months on what you've saved up. Your best bet here is to get into a software niche and build up a loyal staff. This will not only provide steadier income, but also allow you to hand pick people that you enjoy working with.
2. If you get along with people and have leadership skill, then yes. You should know by now whether people tend to take their lead from you or not.
3. An MBA is a great way to network with other people who are aiming towards executive-level positions. This will pay off in 3-5 years as some of those people land those positions and you can ride their coat-tails, or they can ride yours if you are the lucky one.
4. I'll let others take a crack at that.
We all like praise, but a hike in our pay is the best kind of ways.