Right now, I've been smiting and rebuilding, as needed/desired. I hope that the buildings can be fully captured in a later version of the game, although I have heard of a workaround: if one side completely destroys the town (including the Town Center) then all of the buildings flip. Haven't tried it myself yet--that'll be next game
As for 2 and 3, I'll sum them up together:
points. Upgrading buildings gives you a massive point boost. At the same time, destroying an upgraded building gives the same boost to the other side. As such, you don't want buildings to be repaired, because then they can't be destroyed.