Blizzard has repeatedly stated it is approved and no plans are in place to change things. Caveat: they may change at some point (obvious caveat is obvious).

That system should be able to do 3 easily, 4-5 might work but you'll have to experiment to find out.

Private server = NONO. Our forum guidelines strictly prohibit discussion of that subject and the same goes for any other discussion of how to break the game's Terms of Use.

If you can't afford multiple accounts, I might suggest that your hardware plans are a whole hell of a lot further off. :P

Best of luck figuring things out.