Airport Extreme does not support Time Machine. As for Time Capsule, I guess some fail and some don't. But why do you say it's not upgradeable? Apple has updated the software several times, and you can easily swap the hard drive.
He did seem to say that, but the TC is *not* a cable modem. There are too many different ways people connect to the internet. That's why the Apple products just stick to ethernet for the physical connection. Adding extra hardware in there would only benefit a few, but cost everyone.
No. But each use has their own account, right? They should.
You can already authorize multiple iTunes accounts simultaneously. Log out of one account (iTunes store > click on account name > sign out). The account stays authorized even though you are logged out. Then authorize the other accounts the same way. They'll all stay authorized.