1) When item morale reach 0, you don't receive any effect from the item.
2) Its the race that is favorable to the item. For detailed info on what increase/decrease the morale of a particular item, right click the item and read the info on it. It will describe what the item like and don't like in abstract form.
3) There is a icon on the top right on the unit info that will tell you what race the unit is from. If you fill up all with the same race, they get +1 morale except for humans and neutrals i think.
4) See 2)
5) Nope it will always be the same.
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