Yes, you can create rights which are based on users or on usergroups. The rights will be on a per module basis, this means you can manage rights for each module differently. Not all modules support this yet, though.

Yes, thats easy. An administrator is by definition nothing more than a user which can access the administration module with its programs like groupmanagement or rightsmanagement. So each user can be an admin if he has the specific rights.

Keep in mind that you must give the user the rights to see the modules. You can do this in two ways. You can give the user the rights for each module, or you can just put the user into a group which allready has the propriate rights. There is a standard group called "default" which should have basic rights for each module.

'Display Level' determines the order of the modules in the main navigation menu. 'Module Level' is a bit harder to explain: it determines how strong a right is on a module. Anyway, since it is only used in one module (forum) to check if you are an admin... you may as well ignore this setting for the time being.