I do something similar myself and it works quite well, so here are my answers to your questions:
1. Her PC would be authorized on both iTunes accounts. So yes, the arrangment you mention here will work.
2. No, nothing will get wiped out from her iTunes library or iPad.
3. The App Store on her iPad will simply ask for your password in order to update apps from your account. In these cases the authentication alert view will show your Apple ID instead of hers
4. Maybe instead of using the Purchases tabs (since on the iPad there is an odd restriction to only one account and changing it renders the feature useless for 90 days, why is beyond me) use Home Sharing between the computers if possible, or put what she wants on a flash drive to take to her house.