- What kind of hardware do I need to send my mouse and keystrokes to both PCs simultaneously?
If you're already running the WoW instances, then you don't need anything more

- Using ISboxer, I have a Character set for the slave box (4 characters with 4 windows) and a different set for the main box (1 character with 1 window). Will I be able to hotkey switch to characters?
You can technically hotkey to control different characters from the main PC using the KVM mode, but the windows will not swap on the "slave" PC.

- Is there a way to all but shut off the graphics for the slave box? In other words, beyond what the video settings allow you to adjust, is there anything else I can do to improve performance on the slave box?
No

You need one Character Set for the main PC, and one for the slave PC. This will determine which characters launch on which PC.

look at your keymaps and on the right of the list is an option of which computer the send the key to. Default is current computer but you will change the slave's option.

all 5 toons are in one character set. and only make one default setup so all the sets show up when loading IS. For two computers, all you change is which system the kep maps is sent to. The same class can use the same commands.
The Using Multiple Computers guide is correct, I'm not sure what alcattle's talking about to be honest.

To use multiple PCs, you will have two Character Sets. One of them will launch on the slave PC when you launch the main one on the main PC. The windows will stay on the PC they launch on. You won't be able to move the mouse off the screen to control the windows on the slave PC (though you can download Input Director -- it's free and works fine with IS -- and get that functionality). So it's not quite going to be seamless -- you are creating a seam by adding a second PC.