I have recently been configuring my speaker placement, so I've been doing a lot of research on the topic.
1. I agree with Ethan on this. Speakers should be set so their tweeters are at ear height. So, I'd avoid putting the front speakers anywhere but the floor.
2. Since you're using a 7.1 set up, are you referring to side surrounds or rear surrounds? Assuming side surrounds, they should be a foot or two above your ears at your listening position to diffuse the sound and prevent you from being able to localize them. I'm not sure what the ramifications of going higher are. I would reference Audyssey's
forum. I've found a lot of great information there. I'll explain why I'm not addressing rear surrounds next.
3. I would suggest front wides. Research conducted by Audyssey has indicated that the human ear hears sounds in front of you better than they do sounds from behind you (seems pretty logical, right?). Additionally, the ears are better at hearing things on the same plane than from heights. So, this means that, in a 7 channel amp, adding speakers on the same plane (front wide) would give you the best use of the extra channels. Placing them in front of you and higher (front heights) wold be second best. Placing them behind you would be the third best option. This is why I did not address rear surrounds above.
4. Subs are supposed to be omnidirectional, so it shouldn't matter where you place it, you won't be able to localize the sound. However, that being said, location does have an impact on the way they sound. A popular way of determining the optimal location is to place the sub in your listening position, play a bass-y source on your system and crawl (literally) around your home theater to determine where the sub sounds best. Place it there. If that's a little too OCD for you, the corner will be fine, but it will sound boomier there, so it may require some tweaking.
5. I've never used one, but it can't hurt! If you don't use it, feel free to send it my way...