1) The rule changed when the kingdom building rules were revised in Ultimate Campaign.
2) I have not done a building-by-building comparison between the two sets of rules, but I believe that the majority of building costs remained the same.
3) To get magic items in the kingdom economy, which the PCs can buy.
4) Any item below the settlement's gp limit has a 75% chance of being available. The item slots exist separately to that chance, and in addition to it.
5) This question is more suited to advice than rules questions. It is possible (though harder) to make a viable kingdom without any starting BP. Build whatever feels right.
Now that I've answered those, some background. The original kingdom rules from the Kingmaker AP allowed for runaway economies. This was an oft-pointed-out flaw, and the ability to exchange magic items in slots for BP was a key cause. As a result, the rule was changed so that it can't be done. At the same time, they also changed the rule about the value of items that fill settlement slots, which some people (myself included) consider to be a flaw in the new system, since all it does is guarantee a few items that are still worth no more than the settlement's gp limit. In my home game, the limit on the value of slot items does not exist, and I have had no problems.
The old rule was effectively allowing the rulers to walk into a magic shop, claim any item they wanted, and sell it themselves, funneling the proceeds into the treasury rather than to the shop owner. Not exactly fair, and definitely not likely to inspire trust from the citizens. The impact of this change has been mitigated by higher income in the taxation step of the income phase.