1- I don't use the hotmail-outlook connector so I'm not sure how it works,maybe @
dtrush can fill u in on this but in theory everything should be in perfect sync since outlook would be downloading the data from ur hotmail account.
2- the contacts will not be duplicated and u can link them. This is done automatically once or twice a day but u can do it manually as well
one more pointer make sure that u sign into the hotmail account first when u get the phone and make sure that it is not a hotmail account that you've had since high school or more than a year old for that matter, that should be the secondary account. This is to prevent ur contact list from becoming cluttered with a bunch of people who don't have numbers or nonsense numbers.