1. Do you know about the vehicle property? Try setting the sword's vehicle to the knight's hand.
2. I'm not sure what version of Alice you're using (or what model you're using), but all the versions I've used allow subpart manipulation.
3. That's being looked into. At the moment, you can export Alice 3 worlds into Netbeans and do fun programmy stuff to them there, you can use the outside player to play a world without having to start Alice (though you still have to have Alice installed), and you can also use Mama to import your world and export it as a standalone file.
The link for Mama is right here:
http://en.eytam.com/downloads