Merchants have nothing to do with trade routes. You get trade routes between any two ports/cities/castles that are not obstructed by going through somone elses lands/a port blocade and as long as eithier you have trade rights with the faction, or you own both ports/cities/castles.

2. Nope, no happiness bouns. What you see is what you get, but religious unrest can bite hard if you don't whatch out.

3. Nope, it's random, allthough If you click on an enemy general who is unmarried you can try to grab him. Or you can enter Diplomacy.