1) Krauze is a part of the Marshal DeGosh's storyline (the guy in front of the tavern in Verona). When you accept the quest to free Duke of Delaware and do so, the Duke of Delaware will give you the quest to beat out the truth about Demenion's ascension to the throne out of Krauze. Now you can do so.
In another post we found out that if you beat up Krauze before freeing Delaware, he will go to the pier and wait there until you get the quest from Delaware, and then you can question him (he should offer you this as a compensation for his life).
2) Yes, he does. I found that the easy way is to trick him - tell him that his fountain of fortune does work and the dragon killed himself in it. After he makes the blunder, tell him that his time to die is comming and he will offer you a random item in return for his life.
3) I hope there will be more, just like everyone else
