This is the way that iPhoto works. The thumbnail is much smaller than the original so it doesn't take much space. The idea is that the thumbnail represents the original and any edits that you have made. That way the original is never touched.
While it seems wasteful, hard disk space is cheap and it works well in practice as a DAM.
1 - that is how iPhoto works and no you can not change it
2 - you can not ever delete anuything from the iPhoto library unless you do it using iPhoto - in fact you should not be going into the iPhoto library at all - there is no reason to be there
3 - it is not taking double the space - thumbnails are very small
4 - and when you make any modifications to any photo a third version is created - the modified version - and again that is the way iPhoto works
5 - the only way to prevent this is to use a different probram that does no work this way (there are a number of very good reasons why iPhoto and other DAMs - Digital Assett Managers - work this way including keeping the digital negative, non-destructive editins, etc