2) Present internet satellites are all in mostly geostationary orbits that are much further away then the proposed leo's. Realistically the ones we have now introduce a whopping 650ms. This will be a huge improvement.
I'd be pretty nervous about throing 10k pingpong balls into the atlantic IF the collision of two pingpong balls was disastrous :)
Obviously these satellites will be carefully placed NOT to collied - but the effect of a collision is pretty bad. The problem is that any one of them might collide with some tiny piece of junk, turning it 1000 pieces of junk (which is now 1000x more likely to collide with something, and impossible to control). These satellites won't tip the scales, but it's a nightmare scenario that comes ever closer with every satellite launched.
What about the LEO systems such as Iridium, etc. (I forget which is owned by whom and what their statuses are)?
Iridium is a great low-cost, low-bandwidth network though.