Speed is much better, perhaps still a tad quick though. Instead of altering the speed slider, you can get much smoother movement by just moving your actors less on each iteration of your act method.
I wouldn't worry about it too much for now. Greenfoot's limited sound support at the moment is really due to limitations in the built in Java library more than anything else (it's pretty horrendous to work with and only supports basic formats.) The loading time's reasonable at the moment, certainly not too long to wait on my connection anyway - so I'd just leave it as it is for now and swap it to a better format when functionality becomes available.
None at the moment, not easily anyway - you can use MIDI with a helper class but that's it. It's possible to use JLayer or something similar to enable MP3 support, but then you've got the size of the library and applet permissions to deal with. In future Greenfoot versions there should be a GreenfootSound class that enables far more control over sound than at the moment, and should support more sound formats as well such as mp3 :-)
Ah, music will take up a lot of space (unless it's MIDI) - however better sound support for Greenfoot is underway which should improve things on this front a lot when the next version's released :-)
I'd really recommend using a newer version of Greenfoot, there has been a HUGE amount added, changed and fixed since that version was released. You can lock the scenario (which prevents you moving things around) using the lock scenario checkbox, though again you may need to upgrade to get that functionality. If you were using a later version you'd also find that you wouldn't run into the image case problem since the compiler will now pick it up and tell you what the case should be.
As a comment on the scenario itself, it's also quite tall and doesn't fit on my screen all at once, you may want to make it shorter so it fits onto smaller laptop screens and suchlike.
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Code Geass: Factions
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Paul