1) I think it's the number of men. Five units of line infantry will suppress a lot better than ten artillery in my experience for example.

2) There are a couple of units that say they have a suppression bonus. Can't remember any but Dragoons and Gendarmes off the top of my head though, sorry.

3) Short answer: Yes. Long answer: It depends. Man for man they're usually on par in terms of firepower accuracy etc, or at least not so much better that they could overcome 2 to 1 odds. Where Dragoons come into their own is where used as highly mobile, highly maneuvrable firepower. Try holding them in reserve until the two lines of infantry are joined then run your Dragoons around the back and unleash a hail of lead into the enemies backs! Combine that with a quick cavalry charge from your Lancers and you can easily roll down a line of infantry routing them in one fell swoop.

4) To the best of my knowledge, no they don't.

5) Raise taxes, remove the garrison, build schools, destroy buildings that give a happiness or suppression bonus.