1.) Yes, if you are EXTREMELY lucky and get a high-efficiency unit that has not been identified by the manufacturer, distributor, or street dealer as "the good stuff" and sold for big bucks. Good luck with that, in today's green laser market. A year or two ago, it was a whole 'nother ballgame.
2.) A couple feet away is about all a human can manage; it's all about holding it steady as a rock. And you need a black or dark red balloon. With focusing optics, you might be able to pop a balloon with a lower power, but the distance is critical and a few inches is all you can reasonably expect.
3.) Read up some more - any mods you do need to be undertaken only after you fully understand the "why", not only the "what" regarding a mod. And put together some sort of power monitoring device; a green LED, etc. so you can tell if what you are doing is making any difference (and when to STOP increasing the drive current). Search the forum, all this is old news.
4.) See above