This Australian never been to USA. After doing a similar piracy outfit, they got extradited to USA and prosecuted, jailed. Then when released they got jailed again for being an illegal alien, then deported and banned from USA. I wish I was kidding.
The extradition is legal for a few reasons:
+ Must be a crime in both countries
+ Must be a large jail sentence (Due to the excessive copyright penalties, this one is easy)
+ Must be authorised by the attorney general. The Australian government has the choice not to give up one of their citizens, but in this case they chose to do so.
Any country can charge anyone as long as its laws say it has standing to do so. Having your citizens harmed is a common reason.
Yes, there are international agreements regarding copyright infringement and regarding extraditions in general. In general (and again, IANAL) I think it's common for a country to accept to extradite someone if the alleged crime is also considered a crime locally.
I have no idea regarding the latter question :)