1) Yes, go to Settings > Reading > and at "Blog pages show at most" type in the number of posts you would like to show.
2) You can change the code of archive.php so that it displays the blog entries like index.php. Just compare both files and copy over the right code.
3) If you copy over the code from index.php to archive.php you'll find following line there:
$query_string = "cat=".$negative_cats."&paged=$paged";
Replace .$negative_cats. with the category ids you want to exclude - they want show up on your archive blog page than. If you want to exclude categories from the mainpage you can do this via admin panel under Habitat Options > Mainpage Options.