2) So is this definitely the end of the character?
Yes. When "The Colbert Report" signs off, we will bid the bogus, often-outraged anchorman goodbye. "I won't be doing the new show in character, so we'll all get to find out how much of him was me," Colbert said in a statement via CBS. "I'm looking forward to it."
3) How much say did Letterman have in selecting Colbert?
Letterman and his production company own "The Late Show," but Variety reports that once he leaves, CBS will assume ownership. So Letterman didn't necessarily have to sign off on his replacement, although CBS execs have said that he was involved in the process. Letterman released a goofy statement about it, just to be supportive: "Stephen has always been a real friend to me. I'm very excited for him, and I'm flattered that CBS chose him. I also happen to know they wanted another guy with glasses."
4) Who will replace Colbert on Comedy Central?
There's still that long list of possible Letterman replacements - though that probably will get shorter, because Comedy Central looks for a certain kind of personality. E!'s Chelsea Handler makes the most sense, as she reportedly wants out of her current show - but that rumor could just be a negotiating strategy. Either way, Handler's wild personality would be a logical fit for Comedy Central's younger audience.
5) Who will be in Colbert's band?
That is one huge mystery. Almost all late-night shows feature a band, and they've become more hip lately, with the Roots accompanying Jimmy Fallon and Fred Armisen leading Seth Meyers' "Late Night" band. Colbert is musically talented - he did a stint on Broadway in Stephen Sondheim's "Company" and sings on his occasional Christmas specials. Elvis Costello is one of his favorites and a frequent musical guest, but Costello as late-night bandleader seems highly unlikely.