Yes, attacks of opportunity resolve before the triggering action.
The AoO comes before the target move. So, if with the AoO you decide to do a trip instead of a regular attack the provoker would fall in his original square having moved zero feet.
Yes, though it should be kept in mind the flanked character can use the Withdraw action to avoid provoking for the first square of movement completely after which he is not flanked. If the character is trying to get away, this is probably what they want to do.
He could also 5ft step to avoid the AoO, though you could move right back into position on your turns, only one of you would be able to get the flanking bonus since the first person to move would not actually have flanking.
Everyone is bang on the money for this so I can afford a random aside:
only one of you would be able to get the flanking bonus since the first person to move would not actually have flanking.
Readied action is NOT your friend.
I thought the readied action reference was to,show how noth attackers could get the be efit of flank. If the first attacker to move takes his 5ft step, and then readies his attack intil the second attacker moves, they will both get the flanking bonus. This would limit the first attacker to only a standard action attack however.