1) Sure, when talking freelancers / contractors you of course have to account for a ~20% deduction for sickness and vacation. So the base wage increase is often around 100% but compared to a full-time position, it is closer to a 50% increase.

2) It is only unrealistic for freelancers doing many small jobs. Not for contractors with ongoing 40+ hour contracts, of which there is a lot on oDesk. Maybe the confusion is semantics: When I talk of 100% allocation, I mean 160 hours of available work. Over a year, you'd remove 10-20% for vacation and illness, like mentioned above.

Check the work history of the higher rated contractors on oDesk if in doubt about this. There are many doing much more than 160 hours on average.

3) This is certainly not the norm :-) Not a lot of companies are interested in hiring a person a thousand miles away for the same amount of the guy next door. Especially not the type of companies who can afford developers contracting at high-cost market rates i.e. 100-300 USD pr. Hour. Again, if we are nitpicking, there are of course exceptions like especially well known developers or developers who are proven and known to a specific client. Then it's an entirely different story.