1) Right now we have a dropsystem that works like this: Any Wild pokemon have a 14% chance of dropping an item. The item will be a random pokeball/hold item/tm/rock/hm. The drop system that exists right now is just a temporary measure, so people can get evolving itens and tms. In the future we will either have: a different drop system or no drop system(in this case itens would be acquirable through quests and crafting)
2) Right now, no. We may change that in one of the next updates.
3) Yes, Hold Itens works. ( however we don't have all hold itens in our database)
4) Yes.
5) Learnset is gen3, experience equations gen 3, battle mechanics gen 4(plus some mechanics of our own)
We will update the game pokemons/move sets up to gen 5.
6) Right now, nope.