1) goto the control panel, double click the java icon (you may have to change the view settings to see it, depending on version of windows) and then click the update tab and the the advanced button and the can set the schedule and behaviour of the updates there.
2) you can, if you set it to update at a reasonable frequency (I tend to have mine on monthly) It shouldn't be too much of a pain to let it do it when it wants.
3) yes, see answer 1
4) lots of things would stop working on various websites and possibly software installed on your PC.
As a side note, Java has a habit of installing the latest versions and not removing the older versions, if you goto add remove programs (or programs and features, depending on windows ver.) you can remove all but the latest version of java and free up a fair amount of hard drive space.