Answers from my perspective to your questions...
- If your comfortable with Inkscape, etc. then stick with it. Or you could do like some folks and combine the two (create the map in GIMP, etc. then pull the map into Inkscape, etc. to do the labeling)
- No reason you can't use your original map as a base to start from, especially if you like it.
- Depends on the scale you wish to portray
- Check out the Tutorials forum all kinds of great stuff there.